The U.S. cattle inventory has declined 2% over the past year to 89.8 million head as of January 1, 2024, according to the U.S. Department of Agriculture’s (USDA) Cattle report released on January 31st. This marks the lowest January 1 inventory of all cattle and calves since 1951.
Prolonged drought conditions in key cattle production regions along with rising input costs have encouraged heavy liquidation across recent years. The latest report confirms tighter supply trends will likely persist through at least 2025, offering support to historically elevated cattle prices for the foreseeable future.
Years of Liquidation Place Herd at Lowest Level in Over 70 Years
The 2024 cattle inventory came in slightly above trade expectations for a 2.2% year-over-year decline. However, the 89.8 million head tally still represents the smallest U.S. cattle herd in over seven decades.
Since peaking at 94.4 million head in 2023, the beef cow herd has now contracted year-over-year for 11 consecutive reports. The latest 4% decline in beef cows brings the breeding herd down to only 29.4 million head – the lowest level since 2014.
“The January Cattle report highlights the impacts prolonged drought and high input costs have placed on the U.S. cowherd over recent years,” said agricultural economist James Mintert from Purdue University. “Years of liquidation have cut the breeding herd to extremely restrictive levels – a trend unlikely to reverse until weather and market conditions significantly improve.”
The severe contraction places current beef cow numbers well below the average herd size maintained in recent decades. From 1990 to 2020, the beef cow inventory held relatively steady near 32 million head before the extended herd liquidation seen since 2021.
| Year | Total Cattle Inventory | Beef Cow Inventory |
|---|---|---|
| 1990 | 95.8 million | 33.0 million |
| 2000 | 97.7 million | 33.0 million |
| 2010 | 92.6 million | 30.9 million |
| 2020 | 94.4 million | 31.7 million |
| 2024 | 89.8 million | 29.4 million |
“The latest report confirms the U.S. cowherd remains firmly entrenched in liquidation despite stronger calf prices over the past two years,” said agricultural lender Corey Walding. “Until better pasture conditions take hold or supplemental feed costs ease, we are likely to see further contraction before any slowdown or stabilization occurs.”
Calf Crop Posts First Decline Since 2019
Alongside lower cow numbers, USDA also estimated that 2023 calf crop declined year-over-year for the first time in four years. The agency pegged last year’s calf crop at 34.7 million head, down 1% from the 2022 production level. That marks the smallest calf output since 2015 amid a sharply reduced beef cowbase.
Nevertheless, USDA estimated the 2023 calf crop as a percent of the beef cow inventory rebounded to 117% from 115% a year ago. This signals improved conception rates as the nation’s remaining beef herd has adapted to persistent drought conditions over recent years.
| Year | Calf Crop | Calves Per 100 Cows |
|---|---|---|
| 2019 | 35.3 million | 113% |
| 2020 | 35.1 million | 111% |
| 2021 | 35.2 million | 112% |
| 2022 | 35.0 million | 115% |
| 2023 | 34.7 million | 117% |
Cattle feeders have competed aggressively for tighter calf supplies in recent years, supporting higher calf values out of ranch country. After posting an annual record high in 2023, 550-pound steer prices continue trading above year ago levels through the opening weeks of 2024. Stronger calf prices have underpinned ranch profitability amid expensive winter feed costs and low cow cull values.
Further Declines Projected Through 2025
With much of the key cattle production regions still mired in long-term drought, most analysts believe further contraction is on tap over the next couple years. The recent herd liquidation has substantially outpaced heifer retention, ensuring tighter future breeding stock and calf supplies.
USDA estimated January 1 beef replacement heifers declined 4% from last year to 4.55 million head – the lowest levels since 2012. At only 155 heifers retained per 100 beef cows, ranchers are not holding back enough heifers to stabilize or grow herd numbers anytime soon.
“Current heifer retention numbers imply we will likely lose another 1 to 2 percent of the breeding herd over the next year or so,” says agricultural lender Corey Walding. “At the same time, first-calf heifers often experience lower conception rates. So until rainfall patterns and pasture conditions move back to normal, we anticipate further declines in the cowherd and calf production.”
In its latest 10-year projection issued in early 2024, USDA anticipates cattle inventory numbers will likely reach their cyclical low point in 2025 before beginning to gradually recover. However, most analysts caution significant relief from the current tight cattle supplies likely remains a few years down the road.
Strong Demand Supporting Record-High Cattle Prices
As herds have declined over the past three years, consumer beef demand has simultaneously rebounded back to pre-pandemic levels. This combination has supported record cattle prices across 2022 and 2023, sharply improving returns for cow-calf producers and cattle feeders following years of losses.
Live cattle futures are trading around $155 per cwt to open 2024, more than 40% above year ago levels. Meanwhile choice boxed beef cutout values have held above $300 per cwt as processors struggle to fully meet beef demand given minimal fed cattle supplies.
“Packers just can’t seem to keep beef cases stocked, offering underlying support to the entire cattle complex,” says market analyst Anne Warden from The Andersons. She projects boxed beef prices will average around $275 per cwt during the first quarter of 2024, helping keep fed cattle values elevated around $150.
The latest USDA Cattle report confirms extremely tight cattle availability over at least the next 12 to 18 months. Analysts widely expect continued strong consumer demand against this declining production backdrop to maintain historically high cattle prices for the foreseeable future.
However, calf producers and cattle feeders still face ongoing challenges from exceptionally high input costs – especially feed and fuel. As a result, analyst Anne Warden cautions historically high nominal cattle prices may not translate into better profitability without significant easing of key production expenses or wider cattle price spreads in the coming years.
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