At the recent Cattle Industry Summer Business Meeting in San Diego, Senior farm and ranch broadcaster Ron Hays spoke with senior animal protein analyst from Terrain, Don Close. Our Coverage from San Diego is powered by Farm Data Services of Stillwater.
Don Close described the current cattle market as one of the most unique and strongest he’s ever witnessed, driven by two key factors: robust beef demand and surprising price resilience across all weight classes. “The big drivers [are] just how solid beef demand is, the consumer has been incredibly committed with us on this rally,” he said. He also noted, “It’s really unique to see the price levels we’re seeing with all weight classes of cattle, but particularly with calves,” emphasizing the restraint cow-calf producers have shown in expanding herds despite the strong market.
When asked about herd rebuilding, Close expressed skepticism that the U.S. cow herd is in meaningful expansion yet. He pointed to the upcoming Cattle on Feed report as critical. “I’m kind of holding my breath here till I get that cattle on feed report to make a complete reevaluation of the market at that time.” That report, especially the breakdown of heifers and steers, will be a “bellwether for the remainder of the year,” he said, adding that heifer retention will determine how much expansion is truly underway.
Close offered a clear benchmark for measuring true herd expansion, stating, “I’m of the belief that we’ve got to get below 36% of heifers as a percent on feed to mathematically be expanding.” He explained that while cow slaughter has slowed, “I don’t think we can expand by not killing cows, we’re totally dependent on the retention rate on those heifers.” For context, he reminded listeners that during the last major expansion cycle, from 2014 to 2015, heifer placements dropped to around 32%.
Turning to consumer trends, Close emphasized the growing importance of ground beef in the beef sector’s economic picture. “If we’re going to succeed in the beef business, we’ve got to feed that beef ground beef market,” he stated. He believes ground beef may now represent as much as 57% of total beef consumption: “I would argue I think we could easily be into the 57% level.” This growing demand has driven more rounds and chucks into the grind category, consuming a substantial amount of fed-quality beef.
Lastly, Close highlighted a shift in consumer behavior at retail, especially around premium ground beef offerings. “Absolutely true, particularly the specialty markets, the prime ground beef, the branded ground beef, even wagyu ground beef — there is a full spectrum being offered out there, which is great,” he said. These high-end products are selling at a premium and are evidence of consumers’ continued willingness to spend on beef, even amid tight supplies and higher prices.
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