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Since the United States Department of Agriculture (USDA) started publishing US cattle herd size data in 1973, a persistent downward trend has been present through time with only a few local peaks. In fact, as of the end of 2024, the US cattle herd size reached the lowest level on record and is more than thirty-percent smaller than the peak size it reached in 1974, and only four-fifths of the average size from 1973 to 2024 despite rising cattle prices over the same period.^[1] Cattle herd size is cyclical, with a typical cycle length of about ten years. The current cycle started in 2013-2014 from a low base, with this period marking the second lowest level on record. With this context, it is not surprising that the size of the herd at the end of that cycle, and start of the current one, is so diminutive. Historically, when the market experienced periods of constrained herd size and healthy demand, beef prices rose, creating a price incentive for ranchers to increase the size of the herd to capture expanded margins. Recently, however, we’ve witnessed a breakdown in this historical relationship, with average herd sizes declining over the past three years despite live cattle prices more than doubling.^[2] There has also historically been a positive correlation between improving living standards and animal protein consumption^[3], which means we should be witnessing a trend of higher beef consumption, higher beef prices, and larger herds in response to gross domestic product (“GDP”) growth over the last 50 years in countries like the US. However, US per-capita bovine-product consumption and herd size have been declining for decades. So, where’s the beef?

The drivers behind the downward trend in US herd size since the 1970s are varied, including lower expected demand due to dietary shifts away from beef, a rising proportion of US beef demand being met by imports, and technological progress. One reason is rising competition from animal protein substitutes, as consumption patterns have seen rising rates of replacement of beef and other red meats with chicken, a healthier and cheaper option. Additionally, the US has become one of the largest beef importers in the world, with Australian, Canadian and Brazilian beef increasingly supplementing domestic supplies, reducing the need for a large domestic herd. At the end of July 2025, the USDA estimated the US would import over 5 billion pounds of beef for the year, almost 50% higher than the trailing five-year average. Finally, advanced breeding and feeding technologies have allowed farmers to do more with less, producing more beef at a lower cost per calf, reducing the need for a large herd size. All of these factors have contributed to the long-term structural trend of declining cattle herd size.

However, shorter-term, cyclical factors such as weather have played a role, too. Consecutive years of drought conditions in the US Midwest have degraded average pasture conditions for the last five years, making young cattle’s natural diet, or “feed,” more expensive. In addition, prices of corn, a major component of more mature cattle’s diet, spiked in 2022 and has remained at elevated levels since 2020, making cattle feeding less profitable, reducing the price incentive to increase head count. The length of the growth cycle for cattle, typically 2 to 3 years from new-born calf to market-ready cattle, and uncertainty around future demand due to outside factors like tariffs has also kept a lid on herd expansions. The emergence of New World Screwworm (NWS), a flesh-eating fly impacting all livestock, in Mexico, caused the USDA to ban imports of so-called “feeder” cattle, which are partially mature animals that are imported into the southern US and placed into feedlots to add weight before processing.

We do not view the decline as an interminable state for the US herd and believe that prices should course-correct and ultimately reverse the recent trend. While the latest USDA survey shows a 1.3% smaller 2025 calf crop and a lower replacement rate for beef cow heifers, female cattle that have not yet produced an offspring but are raised to breed, the share of heifers on feed was at the lowest seasonal level in July level since 2019. A lower share of heifers being placed on feed could indicate rising future retention rates, which is usually a pre-requisite for larger future herd sizes. Lower beef cattle processing rates, with almost 650,000 fewer heads harvested year-over-year through June,^[4] may also indicate intentions to grow the US herd. These, signs point to a stabilizing year for the herd, with the potential for modest, regional, herd rebuilding in 2027 or 2028. Beef prices remain high, and the price incentive remains strong. In terms of commodity market dynamics, Feeder Cattle prices may rise more than Live Cattle prices, given current constraints and lack of supply unique to Feeder Cattle. If the premium for Feeder Cattle relative to Live Cattle shrinks, it may present opportunities to profit from a relative value trade given more supportive fundamentals for Feeder Cattle.

¹ As represented by rolling front month Chicago Mercantile Exchange (CME) Live Cattle futures as of 12/31/24

² As represented by rolling front month Chicago Mercantile Exchange (CME) Live Cattle futures as of 7/31/25

³ Prochazka et al. (2025). Protein consumption in Europe: Sustainability, tradition, and policy implications. Sustainable Development

⁴��, 01 August 2025.