Empty Pens

Feeder Cattle Numbers Still Low Despite Open Borders

It is almost impossible to look at the beef industry in the United States without accounting for our neighbors to the north and south. The North American cattle industry is made up of cows from Canada, Mexico and the U.S; nations who have long enjoyed a complimentary and intertwined trade relationship. Collectively totaling over 116 million head in recent years, the health of the beef market in North America relies on the flow of trade between the three countries whose differing geography and agricultural infrastructure have allowed for a fairly harmonious cycle of beef trading. Mexico sells cattle to the U.S. and here they are fed, processed and sold to American consumers or back into Mexico.

The U.S. maintains a robust beef industry and feeder cattle imports, 90% of which come from Mexico, play a supplemental role in domestic beef supplies while also providing for beef exports to both Canada and Mexico. Cows coming north from Mexico are used to offset supply disturbances caused by anything from drought, to disease, to natural disaster. Imported beef protects the supply of high priced cuts of meat that Americans enjoy and amounts to $400 worth of carcass value per unit that can be sold back into Mexico via cheaper cuts of meat. In essence, we all eat the same cows, just different parts of the animal.

Tightening Cattle Supplies

U.S. cattle supplies have been tight due to drought conditions and in “normal” market dynamics this would have led to an increase of imported feeder cattle from Mexico. However, screwworm cases in Mexico brought an abrupt halt to feeder cattle coming across the border during what is typically a peak season for cattle trade between the two counties. Though trade has resumed under increased safety precautions, feedlot pens are less than full and feeder cattle prices are on the rise. 

March sales closed out with the average 600 pound feeder steer going for $395 which is approximately 13% more than March of 2024 and well above the five year average of $190. Without the influx of supply from Mexico feeder prices could hit record highs in April.

Mexico has also been up against severe drought conditions and come to depend on the flow of cattle moving north into the U.S. during the driest months. A forced holding of cattle in Mexico has made for hefty feed bills. Ranchers have opted to move cattle south where feed is better or slaughter more animals in Mexico rather than rack up feed bills while waiting to move cattle into the U.S. market. An average of 1.2 million cows come into the U.S. every year via Mexico with the bulk of animals arriving between the months of November and March.

Beef Trade Disruptions

Talk of substantial tariffs on imports from Mexico are influencing trade decisions. While the U.S. has yet to shift into herd rebuilding mode, tariffs could force a stronger dependance on domestic beef. Coupled with fewer feeders coming in from Mexico, stable consumer demand and market values climbing towards record highs, the U.S. herd could be poised for a strong comeback. The risks involved in herd expansion amid drought conditions,  could be worth it for those in the industry looking to cash in on these high feeder prices and amount to a win for both the beef and grain industries.

The question is, can the U.S. make up for trade lost to tariffs and screwworm disruptions with an already small inventory? Imported feeders only make up a small percentage of total cattle herds suggesting that disruptions could be minimal.  While last year's market predictions favored increased imports for the sake of driving consumer pricing down. This year, the favorable choice appears to be forcing a rebuild to secure domestic supply. While prices will remain high in the interim, industry momentum would ultimately bring balance back to supply and demand dynamics. 

Yet, the issue is bigger than simply having enough cows to feed American consumers. The changing dynamic appears to revolve around what happens to U.S. beef exports if Mexico no longer needs as much from us? Our compatible markets and intertwined trade flow allow for us to sell back cuts of meat and beef products that are not as popular here in the U.S. The American beef industry will have to go to other markets for export opportunities; which could include Vietnam, Qatar, Pakistan and Turkey where beef consumption and production are on the rise. Or, American consumers could see cuts of meat they are less accustomed to seeing on store shelves.