2024 beef production rises 3% despite tight cattle inventory

Despite concerns about tight cattle inventory, 2024 beef production has increased by 3% from 2023. Cattle slaughter was down only 1% from last year, but heavier carcass weights, up by 44 lbs on average, significantly boosted production. Feedlots have maintained average capacity despite fewer cattle and declining feeder cattle supplies. Heifers made up nearly 40% of feedlot inventories as of October 1, indicating minimal heifer retention. Drought continues to hinder herd rebuilding, with 54% of all U.S. cattle in drought-affected areas. It's too early to predict how winter and the forecasted arrival of La Nina will impact drought. In the West, pasture conditions vary, but hay is inexpensive and abundant, leading many cattle producers to start rebuilding hay stockpiles.

While the U.S. cattle herd remains at a historically low level, U.S. meat exports are strong. Imports of Brazilian processing grade beef carcasses into the U.S. is a significant factor in meeting U.S. demand for ground beef. While some producers worry about increased importation of foreign beef into the country, markets tend to balance out, and U.S. beef is considered a premium product. As cattle numbers and herd rebuilding increase, the need for imported beef is expected to decrease. In the meantime, imports are necessary to ensure that U.S. demand can be met.

Every five years, the USDA and the Department of Health and Human Services (HHS) update the Dietary Guidelines for Americans. The latest proposal, recommending reduced red meat consumption in favor of plant-based proteins, is a disappointment to many beef producers. This proposal is in an open comment period, but some form of these changes will likely be reflected in the finalized dietary standards.

Cattle feeders: Slightly profitable - Bearish 12-month outlook
Cow-calf producers: Profitable - Neutral 12-month outlook

The cost of acquiring cattle will pose significant challenges for cattle feeder profitability, and scarcity may lead to intensified competition, further driving up prices. However, lower feed prices, particularly corn, are a mitigating factor to high placement costs.

Historically high cattle prices and lower feed costs support long-term cow-calf profitability, but headwinds persist with steep replacement cattle costs, ongoing drought, and high interest rates.