National Cattlemen's Beef Association

Rising Beef Prices and Demand Fuel Big Change for the Dairy Industry

Thu, 13 Feb 2025 15:30:00 GMT

The beef cattle industry is evolving, and dairy producers are playing a pivotal role in that transformation. At the 2025 CattleCon, hosted by the National Cattlemen’s Beef Association in San Antonio, Texas, Lance Zimmerman, a senior beef analyst at RaboBank, joined Agri-Talk host Chip Flory to break down the latest USDA Cattle Inventory Report.

Beef Demand Drives More Crossbreds
Despite the U.S. beef cattle inventory hitting a 64-year low, strong consumer demand has propelled beef prices to record highs throughout 2024 and into 2025.

“We’re sitting here today coming out of 2024 with higher per-capita beef consumption than we had in 2022, and we thought that was the cycle high. And yet, we are pushing record-high beef prices—demand is exceptionally good,” Zimmerman noted.

With beef prices remaining strong, dairy producers have fine-tuned their repro programs to capitalize on these market conditions. Many are utilizing sexed dairy semen on their highest-performing cows to ensure a steady supply of replacement heifers while breeding the rest of the herd with beef semen. This approach results in crossbred calves better suited for beef production, offering improved feed efficiency, enhanced carcass characteristics, and greater market appeal compared to straight dairy steers.

The Ripple Effect
Even as more dairy producers adopt beef-on-dairy breeding strategies, overall calf numbers have remained stable. “We had a very prolific cow herd last year,” Zimmerman noted. “And I think part of that is due to the beef-on-dairy mix. We’re keeping these cattle viable longer and managing them more intentionally with better health, genetics, and overall care throughout the system.”

One notable outcome of this shift on the dairy side of the equation is a tighter supply of dairy replacement heifers, which has contributed to rising prices. “We have dairy replacement heifers that have hit $4,000 a head in some areas,” Zimmerman said, emphasizing the supply constraints caused by more selective breeding practices.

USDA data confirms this supply squeeze. The latest annual Cattle Report revealed that as of January 1, only 3.914 million dairy heifers were available nationwide—a 0.9% drop from the previous year and the lowest inventory recorded since 1978. Additionally, USDA made a significant downward revision to its 2024 estimate, cutting its projection by 108,000 heifers to 3.951 million.

Another factor influencing cattle supply is the ongoing decline in veal production. “We’ve seen a long-term trend of fewer calves going into veal production, and that’s expedited in recent years,” Zimmerman noted. This shift means that more dairy progeny calves are staying in the fed cattle supply, further reinforcing the beef-on-dairy movement.

Beef Demand Holds Strong
While the genetic landscape of the beef supply chain is transforming, consumer demand remains resilient. “The strength of demand has been incredible—beef demand is at 30-year highs,” Zimmerman said. He points out that, despite rising prices, beef remains relatively affordable compared to historical income ratios. “In 2014-15, the average consumer had to work 14 and a half minutes to afford a pound of beef. In 2024, they only have to work 13 minutes.”

With consumer demand for beef remaining strong, the beef-on-dairy sector has become a crucial asset to the beef industry. It has also helped dairy farmers diversify by adding a second source of income during a time when milk price margins continue to remain tight.

Click here to hear Zimmerman’s full conversation with Chip Flory on Agri-Talk.

Buckle Up: Here's Why Cattle Prices Are Setting Up for Another Wild Ride in 2025

Fri, 07 Feb 2025 21:47:01 GMT

The cattle markets hit historic highs again to start 2025, and as USDA’s latest Cattle Inventory report showed U.S. beef cattle inventory fell to the lowest level in 64 years , tight supplies and strong demand could push cattle prices to even higher highs in 2025.

USDA’s annual Cattle Inventory Report released Friday shows the U.S. total cattle inventory shrunk another 1% over the past year, with the number of beef cows also down 1%.

Those numbers, along with questions around just how much higher these markets can go, were major topics surrounding the 2025 CattleCon in San Antonio, Texas, (the annual cattle industry convention) this past week.

Signs of a Slowdown?
Economists and market analysts knew the cattle herd was still shrinking, even before the report was released last week. But economists say there are some signs starting to signal that is slowing down.

“We certainly got smaller in 2024. That was actually kind of obvious about a year ago when you looked at heifer numbers,” said Derrell Peel, Oklahoma State University Extension livestock specialist. “If you look at the heifer numbers in this report, we don’t have a lot. And so we’re going to be challenged going forward to stop this liquidation. I think we might stabilize numbers this year, but I think growth is pretty much a long shot at this point.”

“I think we’re getting close to the bottom, as Darrell referenced,” said Don Close, senior animal protein analyst for Terrain, during the U.S. Farm Report live taping at NCBA’s annual convention. “I think the challenge is retaining enough heifers out of the supply that we have to provide the fuel for the build back.”

Calf Crop Was a Big Surprise
Casey Mabry, with Blue Reef Agri-Marketing, said there actually was a surprise in the latest cattle inventory report, and that wasn’t with heifer numbers.

“The biggest surprise to me was really looking at the total calf crop report, because we’re looking at the total cow inventory numbers. I think that probably caught some people off guard, having the calf crop a little bit bigger than what most people’s expectations were,” said Mabry.

Incentives Drive Outcome
With cash cattle hitting records to start 2025 a question on almost everyone’s mind is, can it continue? Mabry said it really depends on if demand can remain steady, since the supply side will remain tight.

“Incentives drive outcome and obviously with grain prices as cheap as they’ve been, and cattle prices as high as they’ve been, we’ve held on to some cattle. So it’s kept the front end of the market really, really tight and it’s kept packers chasing after cattle. So that ran the market $10 or $15 higher, in my opinion, than what we should have on the front end,” said Mabry. “So, it’s going to be really interesting to watch as we go through the back end of this thing. We’ve probably got to work through some stuff right here on the front end. But if the analysts continue to say we’re going to be tighter and demand stays pretty good, we’ll probably see prices exceed where we were before.”

“We’re Still Bullish”
Peel reminds producers there’s a great deal of risk in these markets. He said the markets don’t like uncertainty. With trade concerns and tariff threats, combined with a strong U.S. dollar, the combination is throwing uncertainty into the market.

“We’re very bullish and still bullish in general going forward for average prices,” said Peel. “But we also know that we’re subject to a lot of shocks right now. We’ve seen a couple already. We’re certainly vulnerable. There’s a lot of air below us since this market is so high. So producers really need to still do that risk management. Producers need to think about those marketing windows. If you got caught in a shock in one of those, it could really be devastating to you.”

Close has similar advice. He said with the development of insurance products, plus futures and options contracting, there are several ways for producers to manage risk today.

“At the price level we’re at, and just any measured retracement in the market, it could take you out of the game. At these price levels, it is absolutely imperative to have some kind of price risk management program in place,” said Close.

“I think you just need to run with what I call a keen sense of paranoia,” said Mabry. “I mean, be bullish, be excited about the market, but don’t get overly euphoric. We’ve got to remember back a short three or four years ago, we were all in the doldrums and very scared. And there’s a lot of people that were telling their kids to get into a different business. And now all of a sudden, we’re all jumping on the bandwagon of cattle and getting excited about this. So, we want to make sure that you guys are running your businesses like businesses and not gambling on cattle.”

Your Next Read:

Are More Record Cattle Prices Ahead in 2025?

Cull Cows: More Than Hamburger

Fri, 20 Nov 2020 05:42:12 GMT

Cull cows have been somewhat overlooked in the grand scheme of beef production. While seen mostly as walking hamburger, cull cows are contributors in other ways.

“An awful lot of people think that cows are a by-product of our industry and that most of the carcass is made into ground beef. Pont of fact, that’s not actually correct,” says Keith Belk, meat scientist for Colorado State University.

Belk spoke about the various uses of cow beef during the Cattlemen’s College at the Cattle Industry Convention in San Antonio, Texas.

Arby’s roast beef is an excellent example of the type of lean beef consumers can get from cows. The roast is considered a sub-primal and is completely diluted of all fat before being brined, cooked and sold.

“These products are hugely valuable to the industry, so it is important for everyone to realize how much of the carcass is used as whole muscle cuts,” Belk relates.

In an audit performed at 19 plants specializing in processing cows, more than 43% of the product marketed came in the form of whole muscle products.

Recently there has been a shortage on cow beef with producers holding back females in an effort to increase herd numbers. This has led to increased price pressure on cull cows.

This type of situation makes it appealing to feed cull cows on a higher plane of nutrition that will fall into the white cow classification at packers. “The idea is you feed that high concentrate ration and basically turn the fat color from yellow to white,” Belk adds.

There is also an opportunity to improve the growth of cows through the use of implants and other growth promotants that increase compensatory gain.

Belk says cows should be in good condition before being sold. A body condition score of from 3 to 5 would be ideal.

Cows also need time to replenish their muscle supply, so don’t market them right after calving.

Other notes from Belks presentation:

Cow carcass prices are seasonal and spike around the holidays, typically around days like 4th of July, Labor Day and Thanksgiving.
38.1% of market cows and bulls are purchased directly from the farm or ranch, while 61.9% come from sale barns.
Cuts from the round carry a lot of value in cows because of the leanness.
Think about branding on areas of the hide that won’t ruin the leather which is of high value. For instance branding up high on the hip would be better than on the ribs.
Bruising is the #1 quality challenge Caviness Beef Packers in Amarillo, Texas, faces.