US-based analyst tells what’s really going on with the herd

The US beef herd is a key interest for Australian producers, not only because they are a big customer of the nation’s beef but also a competitor in export markets.

Rebuilding of the United States beef herd could still be a couple of years away as the industry fails to increase numbers.

While the liquidation of female numbers has stalled, Rabo­Research food and agribusiness senior animal protein analyst Lance Zimmerman said breeding heifer inventories remained tight.

The US herd and where it is up to is of key interest to Australian producers, not only because they are a big customer of the nation’s beef but also a competitor in export markets.

And it appears it could be 2026 or 2027 before there is any significant growth in numbers, Mr Zimmerman said.

He said cow culling had slowed considerably as the year progressed.

“January to July total cattle slaughter is down 577,000 compared to the same period last year,” Mr Zimmerman said.

“When you break that total down, beef cow slaughter is down 297,000 and dairy cow slaughter is down 249,000.”

And while the herd liquidation had stopped in both the beef and dairy cow operations across the US, restocking was still not happening.

“Breeding heifer inventories remain tight, and the beef industry is watching this fall (autumn) calf run closely to see if cow-calf producers hold more heifer calves rather than selling them,” he said.

“I do not see any meaningful US beef cow herd growth coming until 2026 or 2027.”

Mr Zimmerman said the season, which was now early autumn, meant pastures were mostly exhausted seasonally.

Lance Zimmerman, Rabobank senior analyst animal protein Lance Zimmerman.

During the next month, there would be a sharp increase in the number of weaned calves reaching market, with about 70 per cent of cow-calf producers calving in the first half of the year. That translated to a large run of fall (autumn) weaned calves there.

“Weather is not as critical to pasture conditions right now compared to the (northern hemisphere) spring since most pastures are slowly entering into dormancy,” he said.

“That said, pasture conditions across the United States were largely average throughout the recent growing season, even as it has been getting drier across the south central and southeast recently.

“There are also drought areas in the north-west US but average spring and early summer moisture conditions in many areas should support good hay and forage production, and May 1 hay stocks (as farms and ranches came off of the peak feed demand from winter/spring) were the largest since 2017.

“I think the last 12 months have allowed cattle producers to manage those stresses better.”

How this all translates into US beef production has been a softening in exports, and Mr Zimmerman said they would continue to trend at lower levels mostly due to higher US beef prices and tighter domestic production.

But the smaller US beef exports had to be put into perspective.

“It is worth mentioning that global beef demand is not necessarily stellar right now either,” he said.

“The first half 2024 saw beef export volumes down 5 per cent compared to last year, and my forecast is for volumes to be down 5 per cent on the year.

“ And I’d expect similar declines next year.”

When it comes to importing beef in the US, Mr Zimmerman described the numbers as “exceptional”.

“Year-to-date volumes are up 16 per cent, but the biggest growth happened in the first quarter when Brazil was leaning hard into the favourable import quota that was available,” he said. “US beef imports seasonally slow later in the year as our domestic cow culling increases, but since cow slaughter is down this year, it may lead to less of a drop in beef imports in late third quarter and the fourth quarter.”

And while numbers are one thing, the political landscape and the upcoming US elections could also play a part in the US beef scene.

Mr Zimmerman said there was a considerable amount of uncertainty surrounding potential election outcomes.

He said no one had confidence in the election outcome right now because there was no recent experience where a party changed its presidential candidate late in the election cycle.

“Donald Trump is still talking about import tariffs, while Kamala Harris is attacking inflation – and specifically food prices,” he said.

“Her goal is to implement policies to keep it in check.

“So, the markets have been pretty chaotic as these messages are digested across the equity and commodity markets.”