How Much Does Beef Cost Per Pound on the Hoof?

Beef prices fluctuate regularly based on supply, demand, and other factors. But how much does beef cost per pound when it’s still on the hoof? Let’s break down current prices for live cattle and what impacts the cost of beef before it hits your grocery store shelves.

An Overview of Beef Pricing

The price of beef typically refers to the cost of beef carcasses after slaughter and processing. However, cattle are first sold live “on the hoof” by ranchers, then sent to feedlots for fattening, and finally sold to packing plants for slaughter.

The price paid for live cattle is called the “on the hoof” price and represents the starting point for beef pricing Packer bids and retail beef prices are both influenced by the initial live cattle prices paid to ranchers,

Tracking Live Cattle Prices

The United States Department of Agriculture (USDA) reports daily and weekly live cattle prices through the 5 Area Weekly Weighted Average Direct Slaughter Cattle report, This provides a good overview of current national rates being paid per pound for live cattle

According to the USDA, during the week ending September 18, 2024, live cattle prices ranged from $1.80 to $1.81 per pound. This price range has held steady over the past several weeks.

The USDA also breaks down live cattle prices by region. For example, during the same week, prices in the Southern Plains ranged from $1.79 to $1.80 per pound. Meanwhile, Northern Plains cattle sold for $1.81 to $1.82 per pound.

Factors Impacting the Cost of Live Cattle

There are several factors that drive fluctuations in live cattle prices:

• Supply and demand – When cattle numbers are up, prices tend to decrease. Low supply causes prices to rise.

• Input costs – Drought, high feed costs, and rising fuel prices can increase production costs, raising live cattle prices.

• Packer and retailer demand – When packers and retailers are willing to pay more for beef, they also pay more for live cattle.

• Export demand – Strong foreign demand, especially from Asia, bolsters prices for U.S. beef and cattle.

• Herd size – It takes years to rebuild beef herds after liquidation, keeping long-term supplies lower.

• Consumer demand – High beef demand from consumers signals packers to pay more for live cattle.

Calculating Beef Value on the Hoof

The on the hoof price provides insight into the initial starting value of cattle. However, it doesn’t tell the full story. The amount of actual beef harvested from each animal impacts true market value.

An 1,100 pound steer might bring $1,980 at $1.80 per pound live. But that animal will only yield about 600 pounds of meat. With 600 lbs bringing $1.80 per pound live, the true value of that beef on the hoof is approximately $1,080.

Dressing percentage, or the percentage of hot carcass weight compared to live weight, can vary from 55% to 65% based on breed, grade, and other factors. Typical averages are around 60-63%.

Historical Trends in Cattle Prices

Live cattle prices fluctuate over time but generally follow certain trends:

• Prices tend to hit seasonal peaks in March, April, October, and November.
• Summer months of June-August usually see lower prices.
• Prices declined from 2015-2019 but have rebounded since 2020.
• Live cattle prices averaged around $1.00 to $1.10 per pound from 2009 to 2014.
• The last big cattle cycle peak occurred in 2014 at around $1.70 per pound.

Adjusting for inflation, current live cattle prices are still below previous historical highs in the late 1970s and early 1980s.

The Impact on Retail Beef Prices

While live cattle prices impact retail beef costs, they are only one part of the equation. Processing, transportation, operational expenses, demand shifts, and other factors affect the final retail value.

However, when cattle prices rise or fall significantly, consumers eventually see similar fluctuations at the grocery store. Generally, retail prices reflect farm-level prices over time.

Current Outlook for Cattle Markets

Most analysts expect stable cattle prices for the remainder of 2024 and into 2025. However, normal seasonal patterns and market shifts will cause temporary price swings in both directions.

Barring any unexpected supply disruptions, such as severe weather events, look for live cattle to trade between $1.75 and $1.85 per pound through next year.

Is Now a Good Time to Buy Cattle?

With cattle prices expected to hold steady near current levels, most ranchers and cattle investors view these prices as favorable. Buying interest will likely pick up at any dips below $1.75 per pound.

However, as with any investment, proper analysis of overall market conditions, input costs, and individual financial situations is warranted before jumping into cattle ownership. But those considering cattle have an opportunity to lock in reasonable prices for additions to their herd.

The Bottom Line

While retail packages show end beef prices, the starting point is live cattle sales off the ranch. Tracking live cattle prices provides insight into the foundational costs of bringing beef to market.

Current live cattle prices averaging near $1.80 per pound represent a reasonable level for ranchers and cattle feeders, given production costs and beef demand. Look for prices to hold between $1.75 and $1.85 per pound over the next 12-18 months barring any major market disruptions.