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The U.S. cow herd size is likely to shrink in 2023 due partly to a loss of pasture ground from drought conditions.

The U.S. cow herd size likely will shrink in 2023 due in part to a loss of pasture ground from drought conditions, while the pig herd may bump up slightly.

According to Chad Hart, Iowa State University ag economist, the cow herd has been growing smaller the last couple of years with producers taking a lot of heifers to town instead of keeping them on the farm.

The breeding herd has dropped in size, too, and will continue to shrink through 2023, he noted.

On the hog side, the industry isn’t growing or shrinking, but rather treading water, Hart said.

“Right now, cattle prices are marching higher as we move through 2023 because of the smaller herd size. We won’t see the hog herd start rebuilding until pasture and range land in the Great Plains are ready to support that,” Hart said. “So we’ll see stronger prices across the board looking at feeder and fed cattle. But when it comes to the hog producers, they’re likely going to see lower prices.”

Domestic demand still seems strong even with some issues internationally. There was a sizable drop in export sales last year for pork compared to 2021, but sales were on par with last year.

“I wouldn’t call it bad, but I wouldn’t call it great. The problem is we built up the hog herd based on increased exports of 2020 to 2021 that’s leading to downward price pressure in the hog industry,” Hart said. “Cattle has had a strong export demand through 2022, but that weakened at the end of the year, falling back toward the average. We’re seeing a little bit of weakness given export demand for cattle, and that’s not really hurting cattle prices nearly as much.”

While high feed costs likely will subside slightly, other input costs are still going up with inflation.

“We are seeing some of the highest costs on the livestock side the industry has ever faced,” Hart said. “They will get some feed price release, especially as we move into 2023. But it’s still going to be a higher cost industry now than ever before,” Hart said.

Andrew Wheeler with the Iowa Farm Bureau Federation added that live cattle prices have been trending upward for the past nine months and are trading near the highest levels seen in the past ,five years.

In fact, beef production in January and February of 2023 was 7.6 percent below year-ago levels, and the January cattle inventory report indicated that beef cow numbers in the U.S. were down 4 percent from year-ago levels.

As grain prices work their way lower, feeder cattle prices are moving higher and this could stimulate some increased retention of heifers for next year’s breeding herd, but in the short-term that reduces beef supplies even more, Wheeler noted.

It is possible that cattle prices during 2023 will continue to run higher than prices seen in 2022 and support higher retail beef prices in the supermarkets, he pointed out. The cattle cycle is likely at a turning point this year with liquidation likely ending early in 2023 and some slight expansion of the cow herd likely to be seen in the January 2024 report.

Hog inventory numbers in the December 2022 quarterly report were down 1 percent from a year ago and 2 percent less than two years ago, Wheeler explained. But the breeding herd was up slightly compared to last year and it is expected that U.S. pork production in 2023 will be slightly greater (1.5 percent) than it was in 2022.

By the fourth quarter of 2023, pork production is forecast to be 4 percent greater than it was in the fourth quarter of 2022, he said.

Hog prices are currently 15 percent lower than they were last year.

For the year, USDA forecasts hog prices to be 6.7 percent less than they were in 2022.

“Exports are doing OK these past few months. Mexico and Korea have seen growth. China, Hong Kong and Japan have seen some decline over the past few months. The picture for exports is still bright, but with the current strength of the dollar, it will see modest gains,” added Pat McGonegle, chief executive officer of the Iowa Pork Producers Association.

“According to the USDA pig crop report, expansion of the herd will be tempered. Issues like high costs of construction and uncertainty of production costs will slow significant growth of the breeding herd.”

Mike Anderson, executive director of the Iowa Beef Industry Council, noted that on the beef side, another record was set for exports, with Japan as the No. 1 exporter and South Korea as No. 2. China is No. 3 but demand there has been skyrocketing, he said.

“An Iowa contingency just came back from a weeklong trip that was amazing. The demand is high in those countries. We went to really neat grocery stores and a Costco. There were huge banners and displays about premium pork and prime beef, so they really do view our meat as a high-end product, a premier product, which is awesome,” Anderson said. “We anticipate the Chinese market to be just huge in the next few years with their increasing population. They don’t have enough food in their own country to feed everyone and have to get it from other countries.

They got a taste of corn-fed beef from the U.S. and can’t get enough of it now.”