As the U.S. cattle herd continues to shrink to the lowest inventory since 1951, feedlots are pulling cattle from nearly every source they can find. Tight supplies and unwavering consumer demand have pushed cattle prices to new record highs, further straining packer margins. However, on the bright side, consumers have more access to Choice and Prime grade U.S. beef than ever before, which is strengthening demand, thanks to the genetic improvements in beef cattle.
Dairy producers have taken notice of these higher cattle prices and accelerated the use of beef genetics on their dairy cows over the past seven years. Roughly 20% of the beef supply is contributed by the dairy industry. As dairy farmer mindsets shifted from producing extra replacements to producing more calves primed for the beef supply, U.S. dairy-bred fed slaughter has grown to be more than 4 million head annually and over half are beef-on-dairy cattle.
Source: USDA
New data to track the market evolution
Cattle analysts had limited pricing data to quantify the impact of beef-on-dairy in the cattle market until March 2024 when the USDA Agricultural Marketing Service started tracking “dairy/beef” animals sold at auction in addition to the historic “beef” and “dairy” categories. An evaluation of this data through February 2025 reveals new patterns.
While the data series is still relatively young and thin because not all cattle move through livestock auctions, dairy appears to not only be benefitting from strong beef demand but also contributing to higher cattle prices overall. Though auction sales account for a small portion of overall sales, the data is worth reviewing. Dairy-beef feeder cattle auction prices averaged $216/cwt., between dairy at $208/cwt. and native beef animals at $253/cwt. For slaughter cattle auction prices, the dairy-beef animals were nearly equal in price per hundredweight to beef at $175 versus $176. Dairy cattle slaughter prices fell considerably to $150/cwt.
Even though dairy cattle were at the lowest price point sold at both feeder and slaughter cattle auctions, they were also the heaviest largely due to having bigger skeletal frames. Dairy feeder cattle averaged 670 lbs./head, beef cattle were the lightest at 600 pounds and dairy-beef at 630 pounds. Slaughter cattle weights followed the same pattern with a larger spread between the weights. Dairy cattle averaged 1,475 lbs./head, nearly 60 pounds heavier than dairy-beef cattle at 1,416 pounds, and approximately 125 pounds heavier than beef cattle at 1351 lbs./head.
On a dollars per head basis, beef feeder cattle were priced the highest at $1,519, followed by dairy at $1,393, and dairy-beef at $1,358. However, once those cattle were sold for slaughter the rankings for price changed and widened. Dairy-beef were sold at auction for the highest average price of $2,485/head. This was $100 more expensive per head than for beef and $275 more per head compared to dairy.
Source: USDA-AMS, CoBank
Beef-on-dairy brings added value to feedlots and processors
Comparing feeder price to slaughter cattle auction price, dairy-beef cattle maintained the largest proportion of their value in this analysis at 81.3% compared to 72.1% for dairy and 69.6% for beef on a per hundredweight basis. For feedlots, owning cattle that sustain their price value from feeder to slaughter is important for business financial health.
On the meat packer side, the dairy-beef and beef slaughter cattle were nearly identical in price per hundredweight, but the size and weight of the animal are not the only two measurements to determine value. Animals sourced from the dairy industry with pure Holstein or Jersey genetics have traditionally produced higher meat grades such as Choice or Prime.
However, there are some limitations, including increased prevalence of liver abscesses, less desirable shapes and sizes of important steak cuts, and reduced yield from end cuts compared to native beef cattle. Utilizing Angus, Limousine or other breeds with more desirable meat characteristics enhances dairy’s contributions to beef production on many levels, which is now quantifiable through public auction data available through USDA.
Beef quality is surging
Consumer beef demand has been exceptional in recent years, and a major reason is quality. Cattle producers have collectively excelled in delivering high quality beef while maintaining production efficiency. A “prime” example is the top grade of beef, USDA Prime. One decade ago, only 4.4% of U.S. beef production graded Prime. In 2024, Prime grade beef was 9.6% of total production at 2.02 billion pounds. Choice beef grew 20% and makes up over three-quarters of market share with 15.77 billion pounds produced in 2024. Production of lower grade meat like Select was cut by 37% from 2014 to 2024 to end at 3.17 billion pounds.
While the contributions from the dairy sector are not necessarily discernible from publicly sourced data, many of the animals from dairy programs that utilize native beef genetics such as Angus can qualify for branded premium programs. In the past, these animals may have had attributes that nullified their eligibility.
Source: LMIC, USDA
Innovating within the cattle sector
While beef-on-dairy animals are not a new phenomenon, the ability to track their performance metrics will enhance efficiencies and profitability in the cattle sector. Being able to track and categorize animals based on their genetic makeup within the three buckets of dairy, beef and beef-on-dairy will help market analysis to determine the makeup of the cattle supply and eventual beef available to consumers. This also applies to the improvements in meat quality and grading as more cattle are graded as Prime and Choice. With less than a year of data to evaluate, the initial assessment is crossbred dairy-beef animals are bringing more value to market for all participants in the supply chain.
