The United States beef cattle population declined by two per cent last year, the lowest since 1951.
In Texas, prolonged drought has prompted culling and its cattle population is down to the level in 2014 which was 23 per cent smaller than 2010.
Ranchers won’t start rebuilding until rain comes and pastures recover from years of drought.
When herd rebuilding begins, beef supplies will decline some more as ranchers keep more females off the market.
Don Close, Chief Research and Analytics Officer, with Terrain says that makes this cycle different than 2014 -15 and more like 2011-12, just because female liquidation is still taking place.
,"We haven’t even started the rebuilding yet, we’re still in the liquidation phase and it's not unrealistic to think that we could continue to be in that net liquidation through 2024."
And he adds there’s no sign of herd rebuilding yet, due to the lack of heifer retention. "We came up with the recent January cattle on feed report that heifers as a percentage on feed was the fourth largest, we've seen in modern history."
Marshall Hansen, Sr. Vice President with Farm Credit Services of America said "higher interest rates are certainty impacting that as well. We have higher costs."
Kevin Good of Cattlefax said "if you remember back to 2010 and 2015, we lost quite a few packing plants, right now we’re starting to build more packing plants so the leverage component will continue to favor the cattle producer longer in this cycle."
Close said "I think we’re still looking at late 2026 at the earliest before we see any potential for increased beef production."
Another factor pointing to higher prices is that the calf crop is the lowest in 82 years.
