My family loves beef. Both my wife and I grew up on farms that raised cattle, so having good beef was something we took for granted. And it’s something we have supplied to our own family as they have grown up and had families of their own. Based on robust demand – even at elevated prices – it appears that most Americans still love their beef as well.

Up until recently, I still raised my own cattle. It’s hard to beat good home-grown beef. But a couple of years ago, I stopped, and instead started buying a good steer from a reputable source and friend. That was almost as good as what I raised myself.

$4,000 – that’s roughly what it cost for me to buy, slaughter and process a steer. Not cheap, right?

As that example shows, prices for cattle are currently high. But, like other parts of the ag industry, costs are high too. Let’s take a closer look at the state of the cattle market and some of the challenges – and opportunities – cow/calf producers are facing.

What to Know About Today’s Cattle Producers

These days, the bulk of our agricultural borrowers are grain producers. It’s largely a function of where we live and the type and topography of land and soil we’re blessed with. Raising both grain and livestock used to be a lot more common than it is today because it simply made sense to diversify and use marginal land to graze cattle or grow hay. A lot of that land is now used for growing crops. It became a matter of economics.

Today’s cattle producers are considerably different than just a few short decades ago. They’ve made huge progress in the efficiency and quality of the animals they raise. Like in grain farming, improved genetics, technology and good management practices have allowed producers to make significant gains in the quality of their livestock and meet increasingly specific consumer preferences and demands.

Raising cattle is not an easy life. It’s still physically hard work. Keeping and maintaining good fences (and understanding that good fences make for good neighbors), putting up hay, feeding livestock during sub-zero winter mornings, treating sick animals, long hours during calving season and very few days off (cattle need to eat every day, after all) – all of this isn’t for the faint of heart. I’ve had several broken bones in my life, and most were related to cattle!

The State of the Market: High Costs, but High Prices Too

The cattle business hasn’t been immune to inflation and the higher costs that are also impacting other farmers, ranchers and producers. Production costs are higher, as the machinery and equipment needed to operate a cattle operation have gotten a lot more expensive. A big round baler, for example, now costs around $75,000.

But, as I mentioned, cattle prices are also high. Typically, a cow/calf producer may wean their calves in the fall weighing 500-600 pounds, depending on factors such as breed or age. 500-pound steer calves are currently priced around $3 per pound – so approximately $1,500 for a calf. Heifers (young females) aren’t too far behind. Fat cattle – those ready for slaughter – can weigh around 1,500 pounds and bring just under $2 per pound. Cattle producers deserve their current prosperity. They go through – and have gone through – some tough times with lower prices, drought, disease and environmental headwinds, just to name a few obstacles. The work required on a daily basis to manage and maintain herd health and animal comfort is challenging and not for the faint of heart.

Recent Market Trends

Make no mistake: The cattle business is a hugely important slice of U.S. agriculture. According to the USDA, cattle and calves accounted for 19.2% of all U.S. crop and livestock receipts in 2023 (corn came in second at 15.2%, and soybeans were third at 11.2%).

The U.S. raises a lot of cattle – around 90 million animals at any given time. Compare that to Brazil, which has well over 200 million head. Many large dairy farms are now breeding many of their dairy cows with beef bulls to make for more desirable cuts of meat and take advantage of strong beef markets. Beef-on-dairy cattle now account for 18%-24% of U.S. beef production.

One item to watch when it comes to cattle producers is the importance of implementing biosecurity management measures. This can help reduce the risk of disease outbreaks that could have a significant economic impact. Beef traceability is also becoming more important for optimizing performance and profitability, allowing packers and processors to track the source of cattle though supply chains.

Cattle producers go through cycles just like grain producers, and it’s interesting to look at the total U.S. cattle numbers over the past few years. When prices are high, there’s historically been a tendency to build back the herd and hold back heifers to take advantage of anticipated continuing profitable prices. In the face of the smallest calf crop in history, that doesn't appear to be the case in this cycle. Those young females are worth a lot of money going to the feedlot to be finished out as slaughtered cattle rather than being held back to ultimately increase the herd size.

Moreover, given the life cycle of a beef animal – which is about 25-30 months from the time a cow or heifer is bred to the time it’s ready for slaughter – quickly increasing the beef supply is hard to do.

Something else to watch: Despite lower cattle numbers overall, the total beef supply is steady or up. How can that be? Well, with cheaper feed, such as corn and beans, being fed to cattle in feedlots, producers are keeping them at a heavier weight. In other words, producers are adding pounds to the total supply for every animal slaughtered.

Read More

To learn more about the industry, read the experience of two Bell cow/calf producers, who share why they’re in the cattle business and the changes they’ve seen over the last decade.

This article appeared in the Q4 2024 issue of Bell’s AgViews newsletter.