Call the Market

This upcoming Friday, Jan. 31, the highly anticipated Cattle Inventory report is set to be released. For this current cattle cycle, the market saw a peak in its cow herd inventory in 2018, when the cow herd totaled 31.8 million head. It wasn't until 2022 that mass liquidation became undeniable for the market, as much of the country struggled with severe drought and nearly unattainable profitability from the grassroot level. Last January, the Cattle Inventory report showed the beef cow herd at an all-time record low of just 28.2 million head. However, with the shift of leverage in the marketplace over the last two years -- allowing cow-calf producers the opportunity to capitalize on all-time record high prices -- everyone is wondering: Is there any chance the U.S. beef cow herd has seen some growth?

Last Friday, Jan. 17, the Cattle on Feed report showed not only on-feed data, but also included the quarterly breakdown of the total number of steers and heifers in feedlots. The report showed steers were up almost 1% from a year ago, but the total number of heifers on feed was down 3.4% compared to a year ago. Heifers accounted for 38.7% of the total feedlot inventory, down from 39.7% in October 2024. And while this data may compel us to draw the conclusion yes, cow-calf producers are indeed keeping females back and the cow herd could be seeing some growth, this is just one factor in the grand scheme of things. The fact that heifers still account for more than 37% of the total on-feed inventory indicates the market hasn't transitioned into a cow herd build backstage just yet.

Aside from heifer inventory in feedlots, there are other compelling factors that indicate the cow herd isn't growing just yet, such as the beef cow slaughter speeds and lingering drought conditions. In 2024, beef cow slaughter averaged 54,492 head per week. That was down slightly from 2023's weekly average of 67,699 head per week and significantly down from 2022's weekly average 75,640 head per week. But compared to when the cow herd shifted from liquidation mode to growth mode last time in the cycle, we likely haven't seen slaughter speeds bottom just yet. In 2014, when the beef cow herd bottomed for the cycle, the weekly average beef cow slaughter rate was 49,273 head. Then, in 2015, the weekly average beef cow slaughter speed was even less at 42,863 head as producers were rebuilding their herds. Personally, I find this data to be extremely compelling, as it inarguably pinpoints the distinct differences in slaughter speeds when the cow herd is in its different cycle stages: growth, stagnant or liquation.

Last, the old reliable saying that there's two factors to consider when trying to analyze whether the cow herd is growing or not -- the availability of green grass and profitability -- always rings true. And with drought as a lingering factor many producers are monitoring closely this winter, I don't believe cattlemen are blind to the fact that if this winter's moisture accumulation is poor, finding enough green grass this upcoming summer could be a challenge.

The industry seems almost anxious to pinpoint when the cow herd could potentially begin to rebuild. I believe this is due to the turn of events that followed last time in the cycle when the industry shifted from its liquidation phase to growth mode. Cattlemen know that these historic feeder cattle prices won't last forever and are cautiously monitoring changes in the beef cow herd to try to anticipate when the market's rally and steam could cease. But between growth mode and liquation mode, sometimes the cow herd sits stagnant, and I believe that's where we are currently. I believe Friday's Cattle Inventory report will again show a decline in the total number of beef cows in the United States based on the weekly slaughter data of 2024, and while some producers may be anxious to begin keeping some females back, I don't believe as a whole that's where all cow-calf producers are.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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