Insight into the 2024 cattle market.
The USDA National Agricultural Statistics Service (NASS) released the annual Cattle inventory report Jan. 31, 2024. Given the continuing drought in important cattle regions, with forced liquidation and elevated beef cow slaughter, the big question was how much the herd declined.
U.S. beef cows on Jan. 1, 2024, at 28.22 million head were down 716,300 head from the 28.94 million head on Jan. 1, 2023. The 2023 and 2024 numbers were even below the 28.96 million beef cows at the last cyclical low in 2014, which saw the previous record-high cattle prices.
2023 marked the fifth straight year of U.S. beef cow cyclical liquidation. Numbers peaked Jan. 1, 2019, at 31.7 milion head, so the five-year decline was about 3.5 million head or 11%.
The rapid cyclical beef cow expansion from 2014 through 2018 meant many cow-calf operations were near fully stocked. Beef production reached record-high levels in 2019, which pressured prices. Even with generally favorable grazing conditions, beef cow numbers began the cyclical decline.
The COVID-19 pandemic in 2020 disrupted cattle slaughter capacity and caused volatility and a cyclical low in cattle prices. Drought also started the year in the Four Corners and Pacific Northwest regions, and expanded into much of the Western United States. Expanding and intensifying drought conditions in 2021 with more than 50% of the beef cow herd in areas with at least some drought contributed to continued beef cow liquidation.
Although cattle prices started increasing cyclically in 2021 and continued in 2022 due to the lower cattle numbers and good domestic and export beef demand, drought even worsened in 2022 with 76% of the cow herd in drought by late summer. Drought conditions in 2023 improved in some important cattle producing regions, with only 35% of beef cows in drought by year end. Cattle prices reached record-high levels.
The top 10 beef cow states in order of importance are Texas, Oklahoma, Missouri, Nebraska, South Dakota, Kansas, Montana, Kentucky, Florida and North Dakota, which account for 57% of the U.S. beef cow herd. All of those states except Kentucky experienced declining beef cow numbers.
Beef cow liquidation was most severe in the Southern Plains with Texas losing 185,000 cows. Missouri continued with a 116,000-head drop, Oklahoma down 69,000, and Kansas dropping 51,000 head.
Declines continued to move up into the Northern Plains with Nebraska losing 67,000 beef cows, South Dakota dropping 31,000, Montana down 20,000 head and North Dakota declining 16,000 head.
Modest beef cow increases were recorded in a few Western, Eastern and Appalachian states. Notable increases were Pennsylvania up 20,000 head, Utah and Kentucky increasing 12,000 head each, with 11,000-head expansion occurring in North Carolina and Virginia.
The 2024 U.S. beef replacement heifer inventory at 4.86 million head declined 71,300 head (1.5%). That was the lowest number since USDA records began in 1965. The number of bred beef heifers expected to calve in 2024 was 3.05 million, down 2% from last year.
The historical low number of replacement heifers will limit beef cow herd rebuilding this year. Of course, weather remains the wild card to when restocking in earnest can occur.
The 2023 U.S. calf crop (including beef and dairy calves) declined 2.5% at 33.59 million head, and will decline again this year.
The declining beef cow herd and calf crops will mean fewer cattle marketed and declining beef production in 2024 and likely in future years. That will be supportive to cattle prices.
Current cattle prices, except for bred cows and heifers, are at record-high levels and are expected to continue to increase cyclically. However, price volatility and risk will likely continue. Drought conditions linger in some areas, the potential size of the 2024 corn crop is unknown, domestic and export beef demand face challenges, and geopolitical tensions continue around the world.