Government data released on Friday revealed that farmers are producing the fewest US beef cows since at least 1971 as drought conditions reduced herd sizes.
This likely resulted in higher prices for meatpackers who butcher the animals for steak and hamburgers.
US Beef Cows Herd Hits Historic Low
The US Department of Agriculture stated in a biannual report that there were 29.4 million beef cows as of July 1, down 2.6% from a year earlier.
It represented the sixth year of dropping numbers of beef cows, and it was the smallest herd for that date since the government started keeping data 52 years ago.
The number of beef cows at the beginning of this year was the lowest since 1962, according to older annual statistics of the herd size as of Jan. 1.
There were 28.918 million head of beef cows at that time. As the amount of pasture available for grazing decreased due to the dry weather, ranchers have been slaughtering cows more often.
Until farmers begin the protracted, years-long process of rebuilding the herd, analysts predict that meat processors like Tyson Foods, Cargill, and JBS SA’s US division will be forced to pay higher prices for cattle.
Plans for new slaughterhouses that will open over a longer period of time suggest that processors will have to compete with one another more to purchase fewer animals.
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Dry Weather’s Impact on Cattle Feedlots
According to Rich Nelson, chief strategist for brokerage Allendale, the packer margins are going to suffer greatly over the next two to three years.
According to a second study from the USDA, producers fattened 1.68 million cattle for slaughter in June, an increase of 3% from 2022. Analysts had anticipated a 1.6% drop in placements from the previous year on average.
Because of the dry weather, there is still not enough pasture for cattle to graze on, so farmers are forcing them into feedlots, according to analysts.
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