<strong>Cattle Cycle Update and 2023 Cattle and Beef Market Outlook </strong>  | TSLN.com

Cattle Cycle Update and 2023 Cattle and Beef Market Outlook  

Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

Beginning in 2020, drought has accelerated cyclical liquidation in the beef cattle industry and especially in 2021 and 2022. To understand what is happening in 2022, the current status of the cattle cycle, and the implications for the future, it is helpful to review the past few years. Table 1 shows several inventory categories and changes in recent years. In general, the total cattle herd, and the beef cow herd specifically, peaked in 2019 and have decreased since then. The inventory of all cattle and calves on January 1, 2022, was down 2.0 percent from the previous year and was 3.1 percent below the 2019 peak. The beef cow herd dropped 2.3 percent year over year on January 1, 2022 and was 4.9 percent below the peak herd inventory in 2019.  

The total calf crop was down 1.1 percent year over year on January 1, 2022 and was down 3.4 percent from the 2018 peak. The July 2022 Cattle inventory report provided a preliminary estimate of the 2022 calf crop of 34.6 million head, down 1.4 percent from 2022 and 4.7 percent below the 2018 peak. The inventory of beef replacement heifers peaked at 6.36 million head in 2017, during the last cyclical expansion from 2014-2019. As shown in Table 1, the January 1, 2022 inventory of beef replacement heifers was down nearly 12 percent from the 2017 peak inventory.  

Table 1. Cattle Inventory and Calf Crop Changes  

 2019 2020 2021 2022 % Change 2021-2022 % Change from Peak 
 1000 Head   
All Cattle and Calves 94,804.7 93,793.3 93,789.5 91,901.6 -2.0 -3.1* 
Beef Cows 31,690.7 31,338.7 30,843.6 30,125.1 -2.3 -4.9* 
Beef Replacement Heifers 5,884.9 5808.9 5803.1 5611.5 -3.3 -11.8** 
Feeder Cattle Supply 26,553.3 25,724.0 26,124.0 25,537.2 -2.2 -4.1** 
Cattle on Feed 14,367.9 14,657.7 14,667.4 14,692.6 +0.2 —- 
 2018 2019 2020 2021   
Calf Crop 36,312.7 35,591.6 35,495.5 35,085.4 -1.1 -3.4*** 

 *Recent peak in 2019; **peak in 2017; *** peak in 2018 

USDA-NASS will release the Cattle report at the end of January 2023 showing cattle inventories going into 2023. There are, however, several indications of the magnitude of the continued liquidation that will be revealed the in the January 1, 2023 data. Despite the general decline in cattle numbers in recent years, cattle slaughter has continued to increase due to drought forced liquidation. Total cattle slaughter for the year to date through mid-October is up 1.8 percent year over year. While steer slaughter is down 1.6 percent compared to last year, heifer slaughter is up 5.0 percent year over year, leading to a total fed slaughter up 0.9 percent over last year. Increased heifer slaughter in 2022 follows a 4.0 percent year over year increase in 2021. Beef cow slaughter so far in 2022 is up 12.8 percent over last year, following a 9.0 percent increase in 2021 over the previous year. Increased beef cow slaughter more than offsets a 2.8 decrease in dairy cow to result in a 5.4 percent year over year increase in total cow slaughter thus far in 2022.  

The increase in cattle slaughter and beef production in 2022 is entirely due to increased female cattle slaughter. Through mid-October, total cow plus heifer slaughter represents 50.9 percent of total cattle slaughter for the year. If elevated cow plus heifer slaughter persists through the end of the year, it will be the first time since 1986 that total female slaughter has accounted for more than 50 percent of total cattle slaughter. The current level of female slaughter indicates significant inventory reductions and sharply reduced cattle slaughter and beef production in the future.  

Cow slaughter continues strong and shows no sign of abating this fall. Beef cow slaughter is still averaging over 10 percent above the seasonally large fall levels of one year ago. The October quarterly cattle on feed report showed that the inventory of heifers in feedlots remains 1.4 percent higher year over year. This indicates that heifer slaughter will continue strong in the coming weeks.  

The indications are that beef cow herd culling in 2022 will be a record level of 13 percent or more, leading to a roughly 3 percent year-over-year decrease in the beef cow inventory. The January 1, 2023 beef cow herd will likely total close to levels last seen in the 2014 low, roughly 29 million head. Such a level is lower than needed to support the beef industry and will provoke significant herd rebuilding when it is possible. The strong pace of heifer slaughter in 2021 and 2022 suggests that herd rebuilding may start slow, with limited availability of replacement heifers in 2023. However, beef cow slaughter can drop sharply when drought conditions improve. With continuing drought conditions, it is not clear when such rebuilding can begin.  

Beef production is expected to decline in 2023 from the record level of 2022 but the magnitude of the decline is uncertain. The smallest decline expected is in the range of 3-4 percent year over year but could be as much as 7-8 percent. The change in beef production will depend on the change in cattle slaughter, which in turn, will depend on drought conditions. If drought persists into 2023, herd liquidation will continue, temporarily limiting the decrease in cattle slaughter and beef production. If drought decreases or is eliminated in 2023, cattle slaughter could drop more sharply causing a larger decrease in beef production. 


Domestic beef demand has held steady in 2022, limited somewhat by consumer challenges, but not weakening. Macroeconomic concerns, including ongoing inflation and recession fears will continue to be a concern for beef demand and will bear continued monitoring. Total beef demand has been augmented by continued growth in beef exports, higher year-over-year in 2022 over the record 2021 pace. Wholesale and retail beef prices are expected to increase with decreased beef production in 2023. Beef imports were sharply higher at the beginning of 2022 but were lower with double-digit decreases in recent months. Total imports for the year are expected to be slightly higher, compared to last year. Total cattle imports are down for the year to date with decreased Mexican cattle imports offsetting an increase in imports of Canadian cattle in 2022. 

Cattle prices are higher year over year in 2022 and will continue to trend higher in 2023. At some point, when drought conditions abate, increased heifer retention and reduced cow culling may cause cattle prices to spike sharply higher. The timing is uncertain with ongoing drought and may be more likely in 2024. Higher cattle prices are expected to increase cow-calf profitability modestly, though producers will continue to struggle with high input costs. Feedlots will be challenged with ongoing high cost of gain, higher feeder cattle prices, decreasing feeder cattle supplies. If drought conditions improve, 2023 could be the beginning of a very dynamic cattle market rollercoaster in the next two to three years.