Tighter supplies of cattle and beef are supporting prices and will continue to do so. Five straight years of U.S. beef cow herd liquidation has resulted in smaller calf crops, cattle on feed and beef supplies.

U.S. beef cow numbers Jan. 1, 2024, at 28.22 million head were down from the 28.94 million head 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 recorded the previous record-high cattle prices.

Expanding and intensifying U.S. drought conditions from 2020 through 2023 were a major cause of cow liquidation. The worst drought conditions occurred in the fall of 2022 with 75% of the beef cow herd in drought.

Drought conditions have continually improved since, with 12% of cattle currently in drought areas.

The 2023 U.S. calf crop (includes beef and dairy calves) declined 2.5% at 33.59 million head and will decline again this year and the next. 

2022 beef production at 28.3 billion pounds (lb.) was record-high, spurred by drought-induced, high beef cow and heifer slaughter. Last year’s beef production declined to 26.96 billion lb., and USDA predicts declines again in 2024 to 26.59 billion lb. and in 2025 to 25.37 billion lb.

Beef demand has been stronger than some expected, especially with concerns about the economy. Inflation, high interest rates, large credit card debt and moderating competing meat prices have been headwinds.

The 2024 choice boxed-beef cutout value, a good indicator of beef demand, has generally been increasing at record-high levels over $300 per hundredweight (cwt.).

Cattle prices reached a cyclical low in 2020 and have increased cyclically to record-high levels.

Cattle and corn 

Shorter supplies and strong demand are supporting cattle prices. Fed steer prices have generally been increasing seasonally to average over $195 per cwt. in mid-year. USDA is predicting fed steers to average record high $184 per cwt. in 2024 and $188.50 per cwt. in 2025.

The two factors that affect calf and feeder cattle prices the most are fed cattle prices, especially live cattle futures prices in the month when the feeder cattle will reach slaughter weight and corn prices. Strong fed cattle prices and declining corn prices throughout 2023 were supportive to calf and feeder cattle prices. 

Furthermore, improving U.S. moisture conditions have supported calf prices for 2024 summer grazing programs. A 10 cent per bushel (bu.) change in corn prices usually results in a $1 per cwt. change in fall calf prices in the opposite direction. So, corn price changes the next several months will be important.

Looking ahead to the potential 2024 corn crop, USDA released the “Acreage” report June 28, 2024. 

The report indicated that U.S. corn producers planted 91.5 million corn acres in 2024, down 3.17 million acres from last year. 

Even though corn planted acreage is down, USDA is projecting 2024 corn prices to average $4.40 per bu. compared to $4.65 per bu. last year. But corn price volatility is also expected as information about crop development, expected yield and final production becomes available. 

When cattle prices are at historic high levels, price volatility is also usually high. The live and feeder cattle futures markets have been especially volatile.

Cattle prices are expected to continue to increase cyclically. However, price volatility and risk will likely continue. Drought conditions linger in a few areas, the size of the 2024 corn crop is yet to be determined, domestic and export beef demand face challenges, and geo-political tensions continue around the world. So, there is risk for lower cattle prices, especially on a seasonal basis. During the increasing phase of the cattle price cycle, marketing plans that establish floor prices, but leave the top side open should be considered.