There are thoughts that keep us all up at night, but one that's been taking up extra room in my mind over the last six months has been the state of the U.S. beef-cow herd.

We all know the cattle cycle has historically operated in a comfortable 10-year span. Where two to three of those years allow for financial gain on the grass-root, cow-calf level, the remaining seven to eight years usually benefit packers and financially squeeze cow-calf operations.

But with the turn of events in this present market cycle, the new question at hand remains: Is the cattle cycle changing? Or is this a one-hit wonder of a fluke?

Historically speaking, by now, we would have "normally" seen significant signs the market's pendulum was beginning to swing -- most likely in the form of heifer retention or notable reductions in beef cow slaughter speeds. And while the latest Cattle on Feed report did show the quarterly heifer inventory came in at 4.38 million head -- down 3.9% from a year ago and the lowest since July 2021 -- there hasn't been any other noteworthy indication a build back is underway.

But with the current landscape of the marketplace, I continue to ask myself: Who's going to build back? Acquiring the land necessary to run cattle is nearly impossible for any young producer unless they're able to scrounge up a lease, which is a cutthroat and competitive acquisition in and of itself. The sheer capital required to operate is unlike most other business ventures as the risk is high, the operational costs are significant and subject to change on the basis of drought and feed availability, and the marketplace in which most cattlemen sell their core asset (the calves) is beyond fickle and unpredictable. Not to mention, the older generation which has some of these variables locked down (land acquired, more access to capital) has largely decided it's an opportune time to sell out as they won't likely see anything like this again in their lifetime.

I don't have the answers as to when the build back is going to happen, when the market is going to noticeably swing, or even when we may see feeder cattle prices soften because of such changes. But there are a couple key points I'd like to offer as I know these are the thoughts that keep you up at night too.

First, the build back the industry saw 2015 through 2018 isn't going to be the same this go-around. You'll typically hear market analysts talk about "v" shaped charts or "u" shaped charts -- and the build back during the last cycle change was a standard "v" shaped chart where the cow-herd liquidation was fast and furious, but so was the build back once market conditions improved and feed resources were readily available. But this time around, we aren't likely to see a fast build back because of factors mentioned above: high risk environment, the potential for continued drought, limited access to capital for young producers, etc.

Secondly, I'm certain the cow herd will not be rebuilt to the levels previously seen. If you look at the cow-herd data over multiple cycle spans, you'll see that time and time again when the cycle ebbs and flows, the build back following a period of liquidation usually doesn't surpass the previous cycle's peak. In 2006, the beef-cow inventory sat at 33.3 million head and in 2019 the cycle peaked at 31.8 million head. So, is it logical to forecast that when the next cycle peak comes around we could expect to see somewhere around 29.0 +/- million head?

If that train of thought stands true over time, during the next build-back phase for the industry there will only be a million head of cows added back into the beef cow-herd as USDA's January 2025 Inventory Report shared the industry had 28.0 million head of beef cows. And with the added beef production via heavier carcass weights, that's not a far-fetched thought either.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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