Herd Size Increase Unlikely

Despite improving pasture conditions and declining feed costs, American ranchers hesitate to rebuild their cattle herds due to high interest rates and input costs. This reluctance to expand herds contributes to a cattle shortage, with calf numbers hitting their lowest point since 1948. Many producers are choosing to slaughter heifers instead of retaining them for breeding, further exacerbating the issue. The tight cattle supply also significantly impacts meat processors like Tyson Foods, who face compressed margins due to higher cattle prices. This understanding of the challenges meat processors face is crucial for the industry. Although improving pasture quality may encourage ranchers to rebuild eventually, the timing of any significant herd expansion remains to be determined.

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