During the months of December 2024 through February 2025, U.S. Department of Agriculture data show that feeders who sold fed cattle were profitable, after suffering significant losses for the cattle they sold in each of the previous six months leading up to December 2024.
If we focus on those three profitable months, feeders purchased 750-pound steers for the average price of $251 per cwt; After feeding those steers to around 1,250 pounds, their average break-even costs were about $192 per cwt, but they were able to sell them for the average price of about $198 per cwt, which earned them an average monthly profit for the months of December through February of $6.56 per cwt, or about $82 per head.
Today, the supply of 750-pound feeder steers is very tight, and while they sold for about $251 per cwt a few months ago, they’re now commanding a market price of about $283 per cwt, which is about $240 per head more than they recently were. But fed cattle prices are not increasing in proportion to the increased price of feeder cattle, and if this doesn’t change, feeders could experience significant losses when purchasing these higher-priced feeder cattle, which means the family-scale farmer-feeders that are dependent on the cattle market for their incomes may shy away from filling their pens for now; or worse, even more of them may go out of business altogether.
Our nation’s family-scale farmer-feeders are an important part of our industry’s critical marketing infrastructure, and losing more of them will have a long-term negative impact on the competitiveness and viability of our U.S. cattle industry.
So why is the supply of feeder cattle so tight?
Well, we know that the beef cow inventory is at a 70-year low and that means we’re now, and we have been, producing fewer calves each year, even in the face of a decades-long run of incredible beef demand and with consumers willing to pay higher and higher prices for beef.
Many media reports about the decline in our mother cow herd point to the drought that started in the latter half of 2020 as the reason our herd size has fallen to a historically low level. But we’ve been sounding the alarm about our declining mother cow herd for decades. And each time we do the beef industry lobby pushes back and says this isn’t a problem because we’re now producing more larger-framed, higher-quality, and heavier cattle, so we simply don’t need as many mother cows as we once did to produce the same amount of beef as we used to.
The effect of the decades-long mantra that the falling mother cow inventory was not a problem was that the nation neglected to initiate reforms to ensure that our nation’s cow/calf producers would have a competitive marketplace that would enable them to remain profitable and to expand as the U.S. population grew and as beef consumption grew.
Instead, our nation’s cow/calf producers were subjected to prolonged periods of low prices, shrinking marketing outlets, and increased imports, causing hundreds of thousands of them to exit the industry.
When we look at historical data, we see that since the turn of the century our nation’s cow/calf producers have been exiting the industry at the average rate of loss of about 9,500 producers per year. But there were periods when that rate of loss slowed below the average, and periods when the rate of loss accelerated well above the average.
For example, the rate of loss of cow/calf producers slowed in the mid-2000s, from about 2004 to 2007. Concurrently, the financial returns experienced by our nation’s cow/calf producers were the highest in history within this period, averaging over $97 per bred cow during 2004 and 2005. You’ll recall that this was the period when the U.S. border was closed to Canadian live cattle imports for over two years.
The rate of loss of cow/calf producers also slowed in the 2013 to 2017 timeframe, which was a time when cow/calf returns again jumped to a new historical high, with returns averaging nearly $212 per bred cow from 2013 to 2017. You’ll recall it was within this period that mandatory country of origin labeling for beef was in effect.
But, the rate of loss greatly accelerated above the average from 2017 to 2022. Concurrently, from 2018 through 2022 the average returns were less than $25 per bred cow.
Thus, the data supports our contention that the reason our U.S. cow inventory is so low today is financial. It’s because for decades our cow/calf producers were subjected to prolonged periods of lack of profitability with only isolated windows of respite. And because no lasting reforms were implemented to protect them from excessive, price-depressing imports in the industry’s highly concentrated marketplace.
–Commentary by Bill Bullard, CEO, R-CALF USA