TFM Perspective 2-2-2024

January Cattle Inventory Report Confirms Lowest Herd in Decades

What’s happened…

As expected, the January 31 release of the Cattle Inventory Report confirmed the smallest U.S. cow herd since the report was first established in 1972. At 28.2 million head, not only was this the smallest herd on record, it was also down 2% from a year ago. In addition, the USDA made small downward revisions to the previous three All Cattle and Calves Inventory estimates. This suggests that continued drought conditions in key cattle-producing states, combined with high input costs, have created an environment of liquidation.

Of key interest is the fact that downward-trending grain prices over the last year and sharp gains for live and feeder cattle markets have not yet spurred an increased calf crop. The All Cattle and Calves figure at 87.157 million head was 98% of a year ago. All heifers 500 pounds and over was 99% of a year ago. Heifers for beef cow replacement was 99% and heifers expected to calve was 98%. Heifers for milk cow replacement was the only category to hold unchanged from a year ago at 4.059 million. Steers at 500 pounds and over at 15.789 million head was 98% of year ago and calves under 500 pounds came in at 13.284 million, only 97% of last year. This last figure suggests tight supplies of market-ready cattle over the next 18 months.

Why this is important…

Why hasn’t the herd expanded with record-high live and feeder prices coupled with profits for cow calf operators? The most logical answer comes in the form of a high level of uncertainty for feed availability. Uncertain pasture conditions due to dry weather and high input costs have also weighed on producers’ decisions to expand their herds. Rising interest rates in the last 12 months have been a consideration more so than any time over the previous decade. Simply put, cattle producers need a boost of confidence before expanding and making long-term plans. The demographics of the cow calf producer must be considered as well. It is estimated that most producers are in the age rate of their 50s and 60s. Calving is hard work and requires special dedication.

Nonetheless, with the cattle inventory report confirming tight supplies, beef prices should stay firm. The luxury of a larger-than-expected corn crop in 2023 suggests ample feed supplies into the fall of 2024. Should another large corn crop be had in 2024, feed price projections are likely to be low for the next 24 months. Ultimately, high beef and low feed prices will build the cattle herd. It doesn’t happen quickly. With feeder prices reaching all-time new highs in recent months, the odds favor that herd expansion is already underway. It will, however, be some time before consumers see relief in the supermarket, as tight supplies over the next two to three years will keep prices high. The concern for the cattle industry is if consumers turn away from beef in searching for cheaper alternatives. While this could happen, it is likely consumers who like beef won’t change their buying habits.

What can you do?

There are ways to protect the firm prices we’re seeing today. Take action by scheduling time with a marketing professional. Learn about the tools that are best suited to you and your operation. Make sure you understand the risks and rewards of any strategy, including the strategy of doing nothing.


About the Author: With the wisdom of 30 years at Total Farm Marketing and a following across the Grain Belt, Bryan Doherty is deeply passionate about his clients, their success, and long-term, fruitful relationships. As a senior market advisor and vice president of brokerage solutions, Doherty lives and breathes farm marketing. He has an in-depth understanding of the tools and markets, listens, and communicates with intent and clarity to ensure clients are comfortable with the decisions.


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Bryan Doherty

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