STILLWATER, Okla. – “The current cattle inventory is the smallest since 1951, with the beef cow herd also the smallest since 1961,” said Derrell Peel, Oklahoma State University extension specialist for livestock marketing.

“The cattle cycle is often described as a 10-year cycle, though cycles have varied from nine to 14 years in length, with only one exactly 10 years,” he said. “Current record prices are heading to cyclically high prices that will likely happen after 2025.”

Grant Dewell, Iowa State University beef extension veterinarian, said when cattle numbers are low, prices increase due to the low supply of calves.

“Normally, after a year or two of increased calf prices, we see an expansion of cattle numbers as cow-producers respond to price signals and increase herd size,” he said. “Eventually, the number of calves produced exceeds demand, and prices start to come back down.

“Since there is a two-year lag from when a heifer is retained until her calves hit the market, equilibrium in supply and demand is overshot, so we typically see rapid price drop, which leads to culling of females and very little retention of heifers, starting us back down to a low point in cattle numbers again,” he added.

When asked why the current inventory is so low, compared to other cycles, he said, “The number of beef cows in the U.S. steadily increased from the early 1900s until the 1970s when we reached the peak inventory for beef cattle. Since the 1970s, each cattle cycle has resulted in a lower inventory of cows, compared to the previous one. Currently, we have about the same number of beef cows as there were in the 1950s.

“Remarkably, even though there are about 30 million less cows today than in the 1970s, the amount of beef production is about the same,” he added. “Improved genetics and management allow U.S. beef producers to produce a much larger carcass more efficiently than ever before, keeping beef production stable.”

He said, “Competition from other protein sources is also a factor. We also don’t see near the fluctuations in cattle numbers now that we did between the 1950 to 2000s. The cattle cycle is a lot flatter than it used to be. This particular cycle we are in seems to be dragging on as we wait to hit bottom, and see any meaningful retention of heifers to start expansion. Although we have had price signals for a couple years, cow-calf producers have been reluctant to start expansion.”

Andrew P. Griffith, University of Tennessee professor of agricultural and resource economics, said there are several reasons inventory is low.

“Several years of drought in key cattle-producing states and low cattle prices prior to 2024 did not encourage retention of heifers to grow the cow herd, and would be the primary culprits,” he said. “There are certainly some regions of the country where urban sprawl and row crops are stealing acres from cattle production.”

When asked what impact the current low inventory will have on farmers, processors and consumers, he said, “The impact on farmers is higher cattle prices, which should begin to encourage heifer retention. As far as margin operators go, they are going to have a higher investment on every head, which means it is more expensive to do business and an increase in risk.

“Processors are going to be tight on supply the next few years, which means strong competition to purchase cattle,” he added. “This may result in some going out of business by closing up shop, or being bought out. Consumers are going to continue paying high prices for beef.”

Peel said, “Cow-calf producers are seeing record-high calf prices and strong returns as an incentive to rebuild the herd. Retaining heifers to do that will make the current tight supply even tighter for a year or two until the heifers are in production in the herd. The supply of heifers is very limited now, and the rebuilding process will take more time than historically.

“Industry sectors above the cow-calf level are experiencing challenging margins as the price increases from the bottom up are squeezing margins,” he said. “This is generally the situation for stockers, feedlots, packers and retailers. Margin compression happens at all levels above the cow-calf.

“Thus, while consumers are seeing higher beef prices and will for many months to come, retail prices will not increase as much or as fast as calf prices, and every intermediate sector will share part of the margin compression,” he added. “The beginning of herd rebuilding is slow thus far, meaning that high prices are expected to persist for two or three years, at least before significant increases in beef production can be realized.”

Dewell said, “The low inventory should keep calf prices strong in the short term until we see significant expansion. Feedlot margins have remained positive. However, packing plants have had negative margins for a while, leading to potential shake ups. Tyson announced last December that they would close their Emporia, Kan., plant (in February), which caused a readjustment in the industry.”

However, he added, “Consumers are relatively unaffected right now as inflation costs are playing more of a role in the increased price of beef, but demand for beef has remained fairly strong.”