The U.S. beef cow herd inventory remains at historically low levels despite high market prices. Drought conditions from 2021 to 2023 led producers to sell cattle. Droughts from 2011 to 2014 also coincided with periods of cow herd contraction.

Beef cow slaughter peaked at 3.9 million head in 2011 during the last contraction. Then, it dropped to 2.2 million in 2015 before rising again. In 2022, cow slaughter reached nearly 4 million head. However, by 2023 it had declined by 12%. The USDA forecasts 2024 slaughter numbers of around 2.9 million.

The CME Feeder Cattle Index provides a glimpse into price trends. During the 2014 to 2015 contraction, prices exceeded $200/cwt as cow numbers hit their lowest. In 2021, feeder prices began rising as cow numbers fell and slaughter volumes increased. Prices reached around $242/cwt.

With cow herd contraction projected to continue, feeder supplies are expected to tighten. This should lead to higher prices. However, factors like elevated interest rates and input costs may slow expansion. Building herd numbers could take time even if market conditions become favorable.

Read more on drivers in the cattle market here.