Beef Supplies to Tighten, Cattle Prices Expected to Increase

While the U.S. beef cow herd and calf crop continue to decline for the third consecutive year, slaughter and beef production are both looking to top 2018 levels by more than 1% in 2021. Even as slaughter numbers seem unaffected by shrinking herds, eventually processing will catch up, likely causing cattle prices to be sharply higher. USDA calculates feeder cattle supply by looking at the number of animals with potential to enter feedlots. This number has been at a record high of 66.7%, keeping inventories higher than average for 80% of 2021. In addition to feeder cattle supply, carcass weights are also taken into consideration. Dressed steer weights remain much higher than the 4-year average. All in all, the outlook remains bright for cattle prices due to both supply and demand. Once the abundance of market-ready cattle are processed out of feedlots, supplies will be tightened. Read more on beef supply and price forecast.