Strong beef prices, due to a 50-year low supply of beef cattle, have encouraged dairy producers to breed cows and heifers to produce beef calves. The math is simple. Higher prices for beef calves compared to dairy calves encourage producers to follow the money trail for a better return.

Ultimately, this will likely increase prices for dairy products due to a contracting herd. Heifer prices will likely climb. For now, they face an uphill battle. Sluggish dairy exports and slow cheese demand in the past six months have contributed to the current weak environment for dairy products.

Estimated milk cows in the U.S. have contracted from 9.401 million in January 2023 to 9.325 million in January 2024, according to the February 2024 USDA milk production report.

Learn more about the shrinking dairy herd impact here.