According to a recent report from CoBank, the U.S. cattle herd has shrunk to its lowest inventory since 1951, pushing feedlots to source cattle from various avenues. Tight supplies and strong consumer demand have driven cattle prices to record highs, straining packer margins. However, consumers now have more access to Choice and Prime grade U.S. beef, thanks to genetic advancements.
Dairy’s Growing Role in Beef Supply
Dairy producers, responding to high cattle prices, have increasingly used beef genetics in their herds, with dairy contributing roughly 20% of the beef supply. This shift has led to over 4 million dairy-bred cattle entering fed slaughter annually, more than half being beef-on-dairy crossbreeds.
Market Data and Price Trends
Since March 2024, USDA-AMS has tracked “dairy/beef” cattle separately at auctions, revealing their competitive pricing. Dairy-beef feeder cattle averaged $216/cwt., between dairy at $208/cwt. and beef at $253/cwt. For slaughter cattle, dairy-beef prices were nearly equal to beef at $175 versus $176 per cwt., while dairy cattle lagged at $150/cwt.
Weight differences also impact pricing. Dairy feeder cattle averaged 670 lbs., beef cattle 600 lbs., and dairy-beef 630 lbs. At slaughter, dairy cattle were heaviest at 1,475 lbs., followed by dairy-beef at 1,416 lbs. and beef at 1,351 lbs.
On a per-head basis, beef feeder cattle led at $1,519, followed by dairy at $1,393 and dairy-beef at $1,358. However, at slaughter, dairy-beef fetched the highest average price of $2,485/head, surpassing beef by $100 and dairy by $275.
Value to Feedlots and Packers
Dairy-beef cattle retained 81.3% of their value from feeder to slaughter, compared to 72.1% for dairy and 69.6% for beef. Meat packers benefit from dairy-beef’s high-quality grades, though challenges include liver abscesses and lower yields for premium steak cuts. Using Angus and Limousine genetics helps address these issues.
Improving Beef Quality
Consumer demand for high-quality beef continues to rise. Prime-grade beef now accounts for 9.6% of production, up from 4.4% a decade ago. Choice beef has grown by 20% to dominate the market, while Select-grade beef has declined by 37%.
Future Outlook
Tracking beef-on-dairy trends enhances market transparency, efficiency, and profitability. As data collection improves, the impact of dairy genetics on beef production will become clearer, benefiting all stakeholders in the cattle sector.
A recent report from CoBank provides in-depth analysis of these trends, highlighting the impact of shrinking cattle herds, rising prices, and the growing role of dairy in beef production. Read the full report here.
