Cattle Pricing News

Heifer Economics: Calculating Replacement Costs in Today's Market

Thu, 21 Aug 2025 15:54:39 GMT

As beef producers consider expansion, key expenses to consider are the cost of buying versus the price of developing your own replacements.

Oklahoma State University’s Mark Z. Johnson says there is evidence of an increase in heifer retention with improved drought conditions across much of the Central Plains and summer video auctions reporting a smaller percentage of heifer calves.

“Retention does not appear to be aggressive,” says Johnson, Extension beef cattle specialist, in a recent Cow-Calf Corner newsletter. “With the calf market on pace for another year of record prices providing incentive, herd rebuilding remains sluggish compared to past cycles.”

Lingering drought continues to limit forage availability in key regions while high interest rates and the substantial capital required to develop or purchase bred females further suppresses expansion. Many producers also remain wary of a repeat of the post-2014 market correction, adding a layer of caution to long-term decision-making.

“Even with bred female values at record highs, relative to calf prices, breds may still be undervalued, a sign of producer hesitation rather than a lack of economic feasibility,” Johnson explains.

He says an excellent metric to consider when purchasing bred heifers is the number of calves it takes to pay for the purchase. CattleFax recently reported in 2025 that figure is projected to average just 2.75 calves, well below the long-term average of 4.5 and far beneath the 2015 peak of 9 calves.

“This ratio is likely to rise over time, driven by higher bred female prices, moderating calf values, or a combination of both,” he explains. “If feed resources allow, this dynamic suggests that adding females to the herd today may be the best time from a breakeven perspective to expand.”

(CattleFax)

Keeping Replacements vs. Buying Bred Heifers

Johnson stresses replacement heifers are expensive; not only with respect to dollars invested but also the expenditure of time and labor involved.

“Recent market reports indicate 550-lb. weaned heifer calves selling for well more than $2,000 per head. Those heifers calves are still two years away from weaning their first calf if all goes according to plan,” he explains. “Accordingly, operations looking to add inventory may find a better option of purchasing bred heifers in the current market.”

What Should Bred Heifers Be Worth?

Johnson says assuming weaned calves remain at a value of $2,000 to $2,500 per head over the next few years, your annual cost of running a cow will largely determine what you should invest in a bred heifer.

“The annual cost of maintaining a beef cow is highly variable and has increased tremendously over the past five years,” he explains. “Variable costs such as fuel, fertilizer and herbicides have been blamed as the primary culprits; however, fixed costs such as equipment, hired labor and land have increased as well.”

Total economic costs associated with U.S. cow-calf production for 2018 were estimated to range from $910 per cow for operations with 500 or more cows to $2,099 per cow for operations with 20 to 49 cows.

“These results show significant economies of scale, with costs per cow declining with increased herd size,” Johnson says.

Kansas Farm Management Association estimates the annual cost of running a cow to be approximately $1,551 according to data collected in 2024.

Johnson says it is noteworthy that pasture and feed only account for $684 of that total. Visit AgManager.info for a detailed breakdown of the other actual expenses.

Market fundamentals are strong for a continued robust cattle market until cow inventories start to climb.

“There is currently not much indication of that happening anytime soon,” Johnson summarizes. “That being said, what bred heifers are worth to your operation, and how many calves a female needs to raise in order recapture your initial purchase price, will depend on how much profit she nets each year per calf rather than on the gross value of each calf she produces.”

Nalivka: Herd Rebuilding – A Weighty Financial Decision

Thu, 05 Jun 2025 14:50:38 GMT

As prices across the beef supply chain have hit record highs, industry discussions have become increasingly focused on the question of heifer retention and herd building — regarding both the timing and the extent. As they always have, I have little doubt that record prices will provide plenty of motivation to expand herds — some herds. While soaring prices encourage herd building, they can also become an obstacle.

Herd building, involving heifers, whether through heifer retention or buying bred heifers, is a financial decision on the part of the cattleman and timing is part of that decision. The decision to retain heifers and expand the cow herd to take advantage of a strong market involves foregone income in the current year. The motivation is to generate added revenue once that heifer has a salable calf and that motivation is reasonable. However, that additional income from another calf is two years down the road at the earliest with added production costs to bring that heifer into the cowherd with a marketable calf.

Looking at the numbers, in today’s record-high market, the foregone income part of that decision is running around $1,800 to $2,000 per head based on prices for 550-lb. heifer calves. And then, there is the added production cost for that heifer, which is real and though highly variable across the country and between cow-calf operations, it likely averages nearly $1,000 annually. Again, the rancher’s motivation to increase income through building the herd to sell more calves at record prices is reasonable, but the analysis is not that simple. Those prices are just that — current. Markets change and the potential of a marketable calf is two years away. In markets, two years is a long time!

So, how about buying a bred heifer? That decision does not involve the foregone income from a heifer calf that was not sold with the calf crop. However, that foregone income is now invested cost, which is higher. While the time to generate income from a calf is shortened by one year versus retaining your heifer from this year’s calf crop, prices for bred heifers are generally ranging around $3,500. That is no small figure! Since this discussion centers on heifers and heifer retention, buying bred cows or pairs to build the herd is not relevant to this discussion.

The analysis and discussion of herd building goes beyond record-high markets. It is an important financial decision made by ranchers and farmers and that decision goes beyond current market conditions in a changing market environment. My market outlook discussions have included these points as part of my analysis.

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Buckle Up: Here's Why Cattle Prices Are Setting Up for Another Wild Ride in 2025

Mon, 10 Feb 2025 14:13:42 GMT

The cattle markets hit historic highs again to start 2025, and as USDA’s latest Cattle Inventory report showed U.S. beef cattle inventory fell to the lowest level in 64 years , tight supplies and strong demand could push cattle prices to even higher highs in 2025.

USDA’s annual Cattle Inventory Report released Friday shows the U.S. total cattle inventory shrunk another 1% over the past year, with the number of beef cows also down 1%.

Those numbers, along with questions around just how much higher these markets can go, were major topics surrounding the 2025 CattleCon in San Antonio, Texas, (the annual cattle industry convention) this past week.

Signs of a Slowdown?
Economists and market analysts knew the cattle herd was still shrinking, even before the report was released last week. But economists say there are some signs starting to signal that is slowing down.

“We certainly got smaller in 2024. That was actually kind of obvious about a year ago when you looked at heifer numbers,” said Derrell Peel, Oklahoma State University Extension livestock specialist. “If you look at the heifer numbers in this report, we don’t have a lot. And so we’re going to be challenged going forward to stop this liquidation. I think we might stabilize numbers this year, but I think growth is pretty much a long shot at this point.”

“I think we’re getting close to the bottom, as Darrell referenced,” said Don Close, senior animal protein analyst for Terrain, during the U.S. Farm Report live taping at NCBA’s annual convention. “I think the challenge is retaining enough heifers out of the supply that we have to provide the fuel for the build back.”

Calf Crop Was a Big Surprise
Casey Mabry, with Blue Reef Agri-Marketing, said there actually was a surprise in the latest cattle inventory report, and that wasn’t with heifer numbers.

“The biggest surprise to me was really looking at the total calf crop report, because we’re looking at the total cow inventory numbers. I think that probably caught some people off guard, having the calf crop a little bit bigger than what most people’s expectations were,” said Mabry.

Incentives Drive Outcome
With cash cattle hitting records to start 2025 a question on almost everyone’s mind is, can it continue? Mabry said it really depends on if demand can remain steady, since the supply side will remain tight.

“Incentives drive outcome and obviously with grain prices as cheap as they’ve been, and cattle prices as high as they’ve been, we’ve held on to some cattle. So it’s kept the front end of the market really, really tight and it’s kept packers chasing after cattle. So that ran the market $10 or $15 higher, in my opinion, than what we should have on the front end,” said Mabry. “So, it’s going to be really interesting to watch as we go through the back end of this thing. We’ve probably got to work through some stuff right here on the front end. But if the analysts continue to say we’re going to be tighter and demand stays pretty good, we’ll probably see prices exceed where we were before.”

“We’re Still Bullish”
Peel reminds producers there’s a great deal of risk in these markets. He said the markets don’t like uncertainty. With trade concerns and tariff threats, combined with a strong U.S. dollar, the combination is throwing uncertainty into the market.

“We’re very bullish and still bullish in general going forward for average prices,” said Peel. “But we also know that we’re subject to a lot of shocks right now. We’ve seen a couple already. We’re certainly vulnerable. There’s a lot of air below us since this market is so high. So producers really need to still do that risk management. Producers need to think about those marketing windows. If you got caught in a shock in one of those, it could really be devastating to you.”

Close has similar advice. He said with the development of insurance products, plus futures and options contracting, there are several ways for producers to manage risk today.

“At the price level we’re at, and just any measured retracement in the market, it could take you out of the game. At these price levels, it is absolutely imperative to have some kind of price risk management program in place,” said Close.

“I think you just need to run with what I call a keen sense of paranoia,” said Mabry. “I mean, be bullish, be excited about the market, but don’t get overly euphoric. We’ve got to remember back a short three or four years ago, we were all in the doldrums and very scared. And there’s a lot of people that were telling their kids to get into a different business. And now all of a sudden, we’re all jumping on the bandwagon of cattle and getting excited about this. So, we want to make sure that you guys are running your businesses like businesses and not gambling on cattle.”

Your Next Read:

Are More Record Cattle Prices Ahead in 2025?

U.S. Beef Cattle Inventory Falls to the Lowest Level in 64 Years

Sat, 01 Feb 2025 23:29:49 GMT

Shrinking cattle supplies continues to be the story in the cattle market and part of the reason cattle prices continue to climb. USDA’s annual Cattle Inventory Report released Friday shows the U.S. cattle inventory shrunk another 1% over the past year, now at 86.7 million head. And when you look at just the number of beef cows, that inventory fell 1%, now sitting at 27.9 million head.

Other highlights in the January Cattle report include:

Of the 86.7 million head inventory of all cattle and calves, cows and heifers that have calved totaled 37.2 million
The number of milk cows in the U.S. increased slightly to 9.35 million.
U.S. calf crop was estimated at 33.5 million head, down slightly from previous year.
USDA NASS says the number of cattle on feed were at 14.3 million head, down 1% from 2024

All 👀 were on the January #cattle report today. Here's a look at the #beef cattle inventory over the last 65 years 🥩 . 🇺🇸 Jan inventory was the lowest since 1961 👇👇. At @TerrainAg we have amazing protein economists on the team to help #FarmCredit customers, see their work… pic.twitter.com/weg8KrjcbW
— John Newton (@New10_AgEcon) January 31, 2025

“The big takeaway as we see it was the notable upward revision of last year’s numbers, and we expected that. The past year’s kills have simply been larger than implied by last year’s survey. I think most in the market anticipated that. Not sure if the Algo traders had,” says Arlan Suderman, chief commodities economist with StoneX Group.

“Everything looks pretty in line until you get to that beef replacement heifer number, and I feel like that’s kind of a little bit of a surprise as we’ve been talking about heifer retention,” Scott Varilek, Kooima Kooima Varilek, Sioux Center, Iowa told AgDay’s Michelle Rook. “We’re thinking it’s happening and the last cattle on feed report showed a few less heifers on feed but with a 101 % estimate coming in at 99% we’re still off of year ago levels and still not seeing that rebuild in the cow herd.”

Last year’s USDA Cattle Inventory Report showed the smallest cattle herd in 73 years . And with no strong signs of rebuilding underway, along with strong prices providing no incentive to retain heifers, agricultural economists expected U.S. cattle inventory to shrink even more since last year, which is exactly what USDA revealed on Friday.

“The next takeaway is that we have not started rebuilding the breeding herd. As such, perhaps we have a little higher numbers over the next half year or so, but then things get tighter, and more significantly tighter once we actually do start holding back heifers,” says Suderman.

Higher Highs?

Cattle prices continued to hit records this week. And with no signs of those record prices slowing down, it’s a question of how high these prices will actually go.

According to AgDay’s Michelle Rook, the cattle market continues to smash new records in both the futures market and in cash cattle trade. She reported a strong fed cash cattle market, combined with the border still being closed to Mexican feeder imports has also pushed both live and cattle futures to all-time highs.

Is there any sign of a slowdown in the market, or is a top close? Suderman says fundamentally, the signs show supplies are tight, but the demand piece is a concern.

“Unfortunately, those signs usually come after the top has traded, which is why so many feeders are so nervous,” he says. “Fundamentally, things will still get tighter. But it still comes to the consumer. Consumer confidence pulled back in January, which is a red flag. Headlines are filled with scary scenarios that a trade war over tariffs could bring, which tends to further reduce consumer confidence. That doesn’t bode well for the consumer paying up for the higher cuts of meat at these price levels.”

What Will It Take for Producers to Start to Rebuild?
What would change a producer’s minds and give them confidence to grow their herds again? That’s exactly what we asked in the latest Ag Economists’ Monthly Monitor, which is an anonymous survey of nearly 70 ag economists from across the country. While some said it will just take time, others pointed to the economics of strong cow-calf returns, weaker fed cattle prices and lower prices at the sale barn.

January Ag Economists’ Monthly Monitor

(Lindsey Pound )

Other economists said:

“Today’s high prices are certainly incentive, along with the expectation of moderate feed costs.”
“Government policies, global demand, price cycle”
“Better spring forage supplies could be the most important factor in growth. More quality labor could be critical, too.”
“Confidence that the general economy outlook is positive and that there are unlikely to be negative policy shocks. And, of course, there has to be adequate forage.”
“Improved weather pattern in the West, along with profitable margins.”

Did the U.S. Cattle Inventory Shrink Even More in a Year? 60% of Ag Economists Think So

Fri, 31 Jan 2025 14:50:09 GMT

50% said they expect inventory to fall to 86 to 86.9 million head.
20 percent expect inventory to remain similar to levels last year
An additional 20% think inventory will rise to 88 to 88.9 million head.
And 10% think cattle numbers could to 85 to 85.9 million head.

What would change a producer’s minds and give them confidence to grow their herds again? That’s exactly what we asked in the latest Ag Economists’ Monthly Monitor, which is an anonymous survey of nearly 70 ag economists from across the country. While some said it will just take time, others pointed to the economics of strong cow-calf returns, weaker fed cattle prices and lower prices at the sale barn.

Other economists said:

“Today’s high prices are certainly incentive, along with the expectation of moderate feed costs.”
“Government policies, global demand, price cycle”
“Better spring forage supplies could be the most important factor in growth. More quality labor could be critical, too.”
“Confidence that the general economy outlook is positive and that there are unlikely to be negative policy shocks. And, of course, there has to be adequate forage.”
“Improved weather pattern in the West, along with profitable margins.”

Record-High Prices

January Ag Economists’ Monthly Monitor

(Lindsey Pound )

Cattle prices continued to hit records this week. And with no signs of those record prices slowing down, it’s a question of how high these prices will actually go.

Is it the supply side or the demand side driving prices? According to economists in the survey, it’s both. And that’s why out of the 10 major commodities, economists are most bullish on cattle in 2025.

January Monthly Monitor

(Lindsey Pound )

Advice to Manage Risk
Even with no end in sight, the Ag Economists’ Monthly Monitor asked economists, “What advice you would offer beef producers to consider to make sure they are in the right position to take advantage of high prices now and to be prepared for when the market changes?” Here’s what they had to say:

“Stay sold forward, and avoid over-leveraging.”
“To just keeping looking at their genetics, retaining those with the best traits to continually improve herd quality and meat marketability.”
“For those with adequate forage availability, the near-term outlook for cattle profitability is very positive. Remember, though, that all good things come to an end—those who wait too long may only have more animals to market when prices turn back down again.”
“Consider all options for their risk management strategy, including both insurance products, futures, options, or other strategies.”
“You must have something to sell.”
“Today, there is more downside price risk for cattle prices. Risk management against a significant decline in future cattle prices should be considered today.”
“Hedge sales and inputs both. Hedge the crush!”

What Four Questions Will Cattle Market Need to Answer in 2025?

Wed, 08 Jan 2025 20:29:13 GMT

Trends are always difficult to ascertain coming out of holiday periods as many markets are closed and volumes tend to be pretty light, but cattle prices have started 2025 very strong. While questions exist on the demand side, tight cattle supplies will remain the primary driver in the new year and should continue to support prices. And as always, weather will have a significant impact on feed and forage availability and cattle marketing patterns. As I write this article in early January, I want to discuss four questions that I think will be important for the 2025 cattle market to answer.

Will we start to see significant heifer retention?
This question has been circulating for the better part of the last two years. There are a lot of reasons why retention has been delayed including weather, production costs and interest rates. But market conditions should be very favorable again and I do think heifer retention could be seen in 2025 if weather cooperates. When heifer retention does pick up, it will further tighten supplies of cattle as those females are held out of the marketing system. This will be the first stage of growing this cowherd, which is currently at a 60+ year low.

Can slaughter weights keep increasing?
Most analysts are forecasting beef production to be lower in 2025. These forecasts are based on continued decreases in cattle numbers and the potential for decreased female harvest in response to high prices. In truth, I could have written this exact same thing last year. But with cattle supplies tight, beef prices high, and feed prices relatively low, cattle were fed longer and to heavier weights. This increase in pounds largely offset the decrease in female slaughter and resulted in steady beef production levels for 2024. I will readily admit that I don’t know how much further weights can be pushed, if at all, but those same factors are largely at play again this year. So, I will be watching harvest weight trends very closely.

Will we see greater than expected growth in pork and poultry production?
Holding everything else constant, lower feed prices increase returns across all livestock species and lead to greater production levels. And production levels of competing meats do impact beef and cattle prices. Recent increases in pork production have been driven almost entirely by productivity, rather than increases in breeding inventory, and increases in broiler production have been running close to the long run trend. I just point this out because production increases can occur much faster in the hog sector than the cattle sector, and faster still in the poultry sector. While there aren’t many indications of expansion in other species currently, this was a factor in 2015, and I think it bears watching in 2025. It is important to remember that beef supplies are not the only factor that impacts beef prices. All proteins compete in the meat case.

What will be the impact of any changes in trade policy?
Trade has been a major topic of discussion recently and I doubt that will change in 2025. Beef exports have been lower in recent years due to tight domestic supplies and high prices, but the U.S. still exported the equivalent of roughly 11% of production last year. In the past, retaliatory tariffs have impacted beef and cattle prices, so it bears watching going forward. It is also important to remember that the nature of beef trade very much depends on the trading partner. For example, we export a lot of beef to Mexico and Canada, but we are also a significant import market for those two countries. And while trade discussions typically focus on beef, a significant number of live cattle enter the U.S. from Mexico and Canada each year. Conversely, over half of U.S. beef exports go to Japan, South Korea and China, but those are almost exclusively export markets. The complexity of each of these trading relationships makes discussion of trade impacts very complex and something that will be interesting to follow this year.

This article was shared by S outhern Ag Today . Kenny Burdine is a University of Kentucky Extension Professor of Agricultural Economics and Livestock Specialist.

Read more: USMEF Looks At Red Meat Trade Opportunities With Mexico, Canada and the United Kingdom

Mexican Border is Expected to Open for Feeder Cattle Week of Jan. 20, Sources Say

Money On The Table: Top 9 Factors That Influence Cattle Price on Sale Day

Mon, 23 Oct 2023 14:37:59 GMT

For cow-calf producers, fall is often a time for preconditioning, weaning and marketing calves. While this year’s prices will likely be towards the top end compared to previous years, could you be leaving money on the table?

South Dakota State University Extension researchers have been monitoring sale barn prices and categorizing lots of cattle in the Northern Plains to see how variables effect the overall check at the end of the day, says a recent SDSU article .

Here’s a list of the nine most influential variables when it comes to receiving the best price for your cattle.

The Sale Barn

Using backgrounded calf data from 2022, it was determined that the sale barn itself can have an impact on prices received at the market. This is likely due to the volume of cattle.

SDSU noted that “high-volume” sale barns received higher prices, while barns considered “low-volume” sold animals at discounts ranging from $5.43 to $19.31 per cwt.

While price discounts may be cause for pause, there are other factors to also consider before making the decision to market cattle at a different barn. Consider other expenses, such as milage differences, marketing expenses and other fees to determine if a change in location would ultimately lead to a change in profit.

Steers Vs. Heifers Vs. Bulls

Consistent with other studies, yearling steers brought a premium compared to similar heifers and intact bulls, which were discounted $13.34 per cwt. and $7.26 per cwt. respectively.

From a management perspective, it may be worth evaluating the use of sexed semen, especially in an operation already implementing artificial insemination breeding practices. Additionally, producers may want to evaluate the cost and effort of different castration methods to reduce the number of bulls, SDSU explains.

Hide Color

The researchers found that similar fall calves and backgrounded calves of any single color brought premiums over mixed lots of cattle—encouraging producers to market cattle in consolidated lots of a single color to avoid discount.

Specifically, lots of black-hided, black-faced cattle received top dollar. The other observations are listed as discounts (on average) relative to the price of these all-black lots.

Red-hided, red-faced cattle were discounted $8.37 per cwt., while white cattle received a $13.95 cwt. discount.

Compared to the all-black counterparts, mixing hide colors led to discounts of $8.83 to $20.74 per cwt. Specifically, cattle with spots, roan, white feet or tails, tiger-stripes and other non-solid color patterns were heavily discounted, as much as $36.85 per cwt.

Animal hide color is often a point where a producer’s breed preference collides with the perceived market-endpoint preference, SDSU notes. While the object of the study is not to influence breed selection, there may be value in evaluating breeding decisions that will provide the most profitable outcome for the operation.

Lot Size

Answering the question—do larger lots really bring a premium? Not necessarily.

In the study, lots were divided into 4 groups: 1 to 20, 21-50, 51 to 100 and 101-plus--assuming the sale barn staff had already separated cattle for uniformity, such as frame size, muscling and body condition.

Overall, cattle in lots of less than 20 were discounted $7.82 per cwt. compared to lots of 21 to 50 head. However, this was the only significant difference, notes SDSU, with larger lots of cattle receiving no additional premiums.

Lot Uniformity

SDSU found that lot uniformity, such as muscle, flesh and height, was very consistent across all barns as outliers in the herd had been pre-sorted before entering the sale ring. The sort provides buyers with the ability to fill orders and needs. Unfortunately, though, it may lead to a group of less than 20 head for the producer, which will likely receive a discount in the ring.

Horns

Discounted $24.63 per cwt., horned cattle take a large hit compared to their hornless counterparts. SDSU researches note this indicates buyers are unwilling to take on the inherent risk to other animals, carcass damage or lost of gain when purchasing horned animals.

Creep Feeding

The study found purchasers were willing to spend an additional $12.93 per cwt. on cattle not offered creep. Producers should evaluate the value of creep feed compared to the total gain and reduced price per cwt. received to determine if feeding creep is cost effective.

Implants

Non-implanted calves brought $7.38 per cwt more than their implanted counterparts. Similar to creep feeding, the cost of implants and increased weaning weights should be considered against the price difference received for non-implanted cattle, SDSU notes.

Vaccination Status

Herd health protocols also play a role in prices received, SDSU found, after evaluating the use of 5-way and 7-way vaccines.

Cattle that received a 5-way vaccine brought $14.59 per cwt. more than unvaccinated cattle, while those receiving a 7-way vaccine were paid $12.19 per cwt more. Additionally, cattle with unknown vaccination status were discounted $22.52 per cwt., and cattle with an unknown 7-way status were penalized $12.42 per cwt.

This data indicates that producers who follow a vaccination protocol and provide a list of dates and vaccinations on sale day are compensated for their efforts, SDSU says.

Read More: Cattle Auction Preparations: A Sale Day Checklist for Ranchers

Meanwhile, producers marketing cattle in a specific program that limits vaccines should ensure appropriate buyers are present and informed to minimize potential discounts.

At the end of the day, understanding production costs and market trends is increasingly important.

Additionally, SDSU notes that understanding these variables discussed will increase competitiveness and flexibility for producers marketing cattle in 2023 and beyond.