– Dr. Kenny Burdine, Extension Professor, Livestock Marketing, University of Kentucky
The decrease in feed prices over the last two years has had a significant impact on the beef sector. Cheaper feed has incentivized cattle feeders to push fed cattle to higher slaughter weights. The combination of higher weights and increased imports of live cattle has resulted in a slight increase in beef production for 2024, despite the fact that federally inspected slaughter has been down by about 3.5%. This can be seen in the table below and stands in sharp contrast to the decrease in beef production seen in 2023 and what USDA-ERS is projecting for 2025. The table also shows year-over-year production changes for pork and broilers for the same time period.
While increased harvest weights are impacting beef production at the present time, long term production growth will come from increasing the size of the US cowherd. Analysts are closely watching female slaughter, heifers on feed, and other factors for signs of heifer retention, but those signs are not yet present. Once heifer retention is underway and the cowherd actually starts to grow, one can start to predict longer run increases in beef production as calf crops become larger. The lack of these expansion signals in late 2024 paints a very encouraging supply picture and price outlook for the next couple of years.
Now focus on USDA-ERS estimates for 2025 in the table above. USDA is projecting a 2.8% decrease in beef production, but an increase in pork and broiler production of 1.9% and 1.4%, respectively. Those estimates will undoubtedly change as we move through next year, but they speak to less availability of beef and more availability of pork and chicken. This is an important reminder that all animal proteins compete for space on the plate. They are not perfect substitutes, and relative price levels suggest that consumers have a stronger willingness to pay for beef, but one can’t ignore the impact of competition in the meat case.
This brings me full circle to the point I want to make. Over the 20 years prior to 2023, US chicken production increased by an average of 1.8% annually, so the recent increases are not unusual. And breeding hog inventories have been decreasing, which means that pork production increases have been driven by productivity gains. But lower feed prices do impact profitability across all species and have the potential to encourage expansion. For example, if we started to combine productivity gains with increases in breeding inventories, we could see much larger increases in pork production. I am of the opinion that material and construction costs, interest rates, and other factors have limited expansion of hog and broiler operations to some extent. But I think it would be naïve to assume that this can’t change in the future.
It is also important to remember that expansion occurs at a very different pace across these species. If beef heifer retention began in 2025, it would likely be 2027 before that would be reflected in higher beef production levels. Given much shorter gestation and younger harvest age, expansion of the hog breeding herd can lead to increased pork production much faster. And the impact is quicker still for poultry. From my perspective, this was something that got lost a bit during the 2014-2015 time period. Beef production decreased in 2015 as cow and heifer slaughter dropped. But pork production increased by more than 7%, and chicken production increased by almost 4%, that same year. This meant more competition in the meat case and contributed to the decrease in cattle prices seen in late 2015 and 2016.
As soon at the January cattle inventory report comes out, I will quickly look at beef cow inventory and heifer retention estimates. I will also keep watching female slaughter and heifers on feed next year for signs of retention. Each of these will provide perspective on future beef production levels, which is very important. But I also think it is important to keep an eye on the inventory of hogs and chickens and the associated production levels of those meats as they will have an impact beef and cattle prices in the coming years too.