Dairy producers across the United States are increasingly turning their attention not just to milk markets, but also to the burgeoning opportunities within the beef market. In recent years, beef-on-dairy has emerged as a significant alternative profit source for many dairies nationwide.
Dan Basse, president of AgResource Company, emphasizes the production of beef-on-dairy crossbreds is critical for maintaining the industry’s current output levels.
“It is something that needs to be in every herd,” he says.
The integration of bottom-end genetics from dairy herds to produce beef appears to be an essential strategy moving forward. And as the average age of cow-calf producers climbs into the upper 60s, Basse predicts beef-on-dairy will remain in demand for years to come. He believes this approach will help sustain beef production and supply, despite challenges faced by traditional beef producers.
Olivia Willrett, market analyst at Five Rivers Cattle Feedlot, recently shared market dynamics from the feedlot perspective during the Global Dairy Conference in Chicago, Ill.
The Cyclical Nature of Cattle Inventory
As Willrett points out, the U.S. cattle inventory reflects a long cycle defined by expansion and contraction phases. Starting with a liquidation phase often triggered by drought, it’s characterized by the reduction of cow inventory.
“That is the other factor we need to consider when we look at the total U.S. cattle inventory — the long-term trend downward,” Willrett shares, noting how despite a contraction and expansion phase, levels never quite expand back to where they were at.
“Generally, when we contract, if we liquidate that cow herd again, we do it into a new low,” she says.
Since 2019, the U.S. has observed a significant contraction with approximately 8 million fewer cattle — marking the lowest herd size in roughly 70 years.
Beef Production Efficiency and Consumer Demand
Willrett says the divergence between cattle inventory and beef production has increased. Despite a reduction in cattle numbers, the industry has managed to produce approximately 10% more beef using 34% fewer cattle than in 1975. This remarkable feat arose from advancements in breeding strategies, genetic improvements, feedlot management and packing techniques. Beef production kept pace with — and even outpaced — domestic consumer demand thanks to these efficiency gains. U.S. consumers have consistently shown an appetite for beef, propelling a steady increase in beef production quality, with current year ratings showing a rise from 65% to approximately 85% in choice and prime ratings.
“This captures more value and more product per head on that animal, to the tune of about 287 lb. — almost a 50% increase over the last 50 years. Why we’ve done all this is because of the consumer,” Willrett says. “The consumer didn’t necessarily hear that we’ve got fewer animals to work with each term of the cycle. They decided they wanted to continue eating beef, and we as producers found ways to deliver that product to them.”
Price Trends and Feedlot Dynamics
Beef pricing has exhibited progressive increases, accentuated by peaks even higher than those witnessed during the 2014 cycle. Currently, on an inflation-adjusted basis, prices mirror those of 2014 — despite leaner cattle numbers. Consumers’ continued strong demand contributes to sustained price levels, with U.S. beef demand remaining resilient.
The growing role of dairy within beef production aligns with consumer willingness to accept current retail beef prices.
“Today, the U.S. consumer is willing to expect retail beef prices at $8.70 per pound and calf and feeder cattle prices that are soaring,” Basse says.
Feedlot operations, meanwhile, have adapted by feeding dairy-influenced cattle longer —contributing to higher feedlot occupancy rates but slower turnover.
Willert says over the last 15 years, we’ve grown our choice and prime rating about 20 points, from 65% to about 85% so far this year.
“We’ve used our genetics, feeding and operational strategies to figure out how to maximize the quality of these animals, while also doing so in an efficient manner,” she says.
The Growing Intersection of Dairy and Beef
As many in the dairy industry are aware, there has been a significant rise in the beef-on-dairy crossover in recent years. This trend has prompted dairy professionals to ponder, “When is high too high?” As the market continues to evolve, questions about supply levels and pricing trends have become increasingly pertinent.
Willert emphasizes the importance of understanding the U.S. cattle feed inventory, which is a valuable dataset published monthly by USDA. This report surveys feedyards across the United States with a capacity greater than 1,000 head, providing vital insights into inventory levels and movement in and out of these facilities.
As we look at the data for 2025, it’s clear fewer cattle are available — which is a direct result of tighter cow and calf supplies. For those maintaining a close watch on the numbers, the June report indicated a further decrease of 1.1% to 1.2% from the previous year. Despite this downward trend, current supply levels remain well above those recorded between 2015 and 2017.
“We’re obviously seeing supplies at surface value higher than a year ago,” Willert says. “But we’ve also achieved those high prices not necessarily because the cattle are in the future, but because we’ve synthetically reduced the supply of market-ready cattle.”
Factors influencing this reduction include a strategic increase in the number of days feeder cattle spend in feedyards, allowing them to grow larger and more efficiently. As Willert points out, this shift helps maximize economic returns by optimizing the growth cycle.
Trade and Consumption Trends
The intricacies of the beef market extend beyond production metrics. Import strategies have become increasingly vital, especially as non-fed slaughter levels have hit lows. Lean imports help balance the demand for blended trim products crucial for popular ground beef varieties. On the export front, while recent declines have been observed due to geopolitical factors like the Chinese market’s volatility, the overall long-term trend remains positive, with exports contributing substantially to cattle value. Domestically, beef consumption continues to grow, bolstered by lifestyle shifts toward higher protein diets, supported by cultural changes spurred by global events like the COVID-19 pandemic.
By leveraging quantitative data and strategic insights, dairy industry stakeholders can better navigate pricing pressures and supply challenges — leading to more informed decision-making in this dynamic market landscape. As the pursuit of excellence in beef production continues, the collaboration between the dairy and beef sectors provides new opportunities for growth and sustainability.
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