Beef-on-dairy calf prices have come down from their highs, but they haven’t fallen out of favor just yet.
While a $1,300 calf doesn’t have quite the same appeal as the $1,700, $1,800 or even $1,900 calves producers were seeing at the market’s highs earlier this year, $1,300 can still be a profitable calf nonetheless.
But as those values come down, producers are watching the numbers more closely, says Abbi Groves, an economist with CoBank’s Knowledge Exchange Research Division, during a recent episode of The Dairy Download podcast.
“We’ve heard from several producers who are watching beef-on-dairy prices every day. It really comes down to one question: Can she cover her feed costs if we keep her in the herd a little longer to produce that calf?” Groves says.
For now, her answer is yes.
Beef-on-Dairy Has Staying Power
Beef-on-dairy began gaining traction more than a decade ago, but adoption has accelerated during the past three to four years. The added calf revenue has become an important part of dairy economics, especially during periods when milk prices weaken.
“Despite these lower prices, we still believe that beef-on-dairy is definitely here for the long term,” Groves says.
As dairy producers get more selective about which cows produce replacements, beef semen is taking a larger share of the breeding decisions.
“We’re selling more gender-sorted semen to make replacement heifers, and pretty much breeding everything else to beef because we need the beef,” Groves says. “If we’re going to be choosy about what animals are going to be our next generation of milk cows eventually in our milking barns, we might as well capitalize on the beef market.”
Even with calf prices near $1,300, Groves says there isn’t a specific price point where dairy producers will suddenly stop using beef semen.
“Maybe they breed a little bit less, but at the end of the day, if we’ve seen the shift into more gender sorted semen and using beef semen on dairy cows, there’s not really another option to choose,” she says. “You still have a calf that needs to be born.”
As calf values come down, feed costs become a bigger part of the breeding decision. Producers are weighing whether to keep a cow in the herd to produce another replacement or breed her to beef.
But breeding decisions made today won’t pay off for nine months.
“That pregnancy is still nine months, and that’s really where the stuff gets a little tricky,” Groves says. “That generational turnover between cow and when that calf hits the ground is a long time.”
That long lead time makes managing price risk more important, Groves says.
Higher Prices Haven’t Stopped Consumers
Consumer interest in protein is helping beef remain resilient, even as higher prices put pressure on household budgets, says Anne-Marie Roerink, president of 210 Analytics.
Consumers are responding to financial pressure by buying less, changing brands, shopping at different stores and cooking more meals at home. But beef has held up better than expected. Ground beef and steak remain familiar products consumers know how to prepare, while some foodservice spending has moved into retail.
Younger consumers also are changing the way they view beef.
“Beef went from villain to vital for a lot of these consumers,” Roerink says.
Gen Z and millennials have historically leaned more toward chicken, but interest in protein and nutrient-dense foods is bringing more attention back to beef. Protein, iron, zinc and B vitamins all add to its appeal, Roerink says.
Consumers also are willing to pay more for products with claims such as grass-fed and organic.
“Those are items that also provide a little bit of that permissibility they’re looking for,” Roerink says. “They do want healthier items, items that are good on animal welfare, for the environment, and for them.”
Beef prices are putting that demand to the test. Ground beef reached $6.89 per pound, just below a record, up 10% from a year earlier and 35% over three years.
Even so, retail beef sales remained strong through the spring before higher fuel costs and broader financial pressure weighed on consumers in May and June. Sales picked up again in July.
“I don’t think we’ve hit a demand ceiling at all,” Roerink says.
A Tight Cattle Supply Adds Support
Groves says the broader cattle market also is supporting beef demand. The U.S. cattle herd remains near a 75-year low, with about 86 million cattle and calves as of Jan. 1.
Fewer cattle, combined with steady consumer demand, is supporting beef prices. But rebuilding the herd will take time.
Pasture conditions, producer age and strong cattle prices all influence whether ranchers keep heifers for herd growth or sell them for cash.
“When cattle and calf prices are at record highs, producers may need to sell heifers to bring cash into the operation rather than hold them back to rebuild the herd,” Groves says.
For now, the industry has not moved into a major rebuilding cycle.
“For right now, we’re not really liquidating further, but we’re not rebuilding yet either,” Groves says. “We’re pretty stable for the time being.”
Recent market volatility has added another layer of uncertainty. New World screwworm concerns, the reopening of the Douglas, Arizona, port for live cattle imports from Mexico, drought and packing plant closures have all contributed to price movement.
It will take time to see how much Mexican cattle imports recover and how the U.S. cattle supply responds, Groves says.
Replacement Heifers Remain a Watch Point
Beef-on-dairy gives dairy producers a way to add value from calves they don’t need for replacements. But it also means fewer heifers are entering the dairy herd.
Groves says there is some improvement on the horizon. CoBank analysis using semen sales and replacement forecasts points to more heifers being born in 2027 and 2028 than in 2025 and 2026.
“We’ll expect more heifers to be on the ground year-over-year than what we saw in 2025 and in this year in 2026,” Groves says. “So that’s good news. But it’s not enough heifers to overcome the decline we’ve had over the past six or seven years.”
More replacement heifers eventually could mean more cows going to slaughter as new animals enter the herd. It also could put pressure on replacement heifer prices.
USDA data show average replacement heifer prices above $3,000 per head this year, with some premiums approaching $4,000.
“That’s something we have to be cautious about because if we have this glut of replacements coming in, then the market price for them will go down,” Groves says.
For producers, the challenge will be keeping enough heifers for the herd while sending the rest to beef.
“If we’re smart and watching and calculating how many replacement heifers we’re making, and then sending everything else to beef in a very general sense, then hopefully things stay fairly balanced,” Groves says.
For now, beef-on-dairy continues to provide another source of revenue. Calf prices are below their highs, but with values around $1,300 and beef demand holding up, the economics still work for many dairies.
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