Three years of drought in U.S. cattle country will take a toll on beef production through 2026 as cattle producers try to rebuild the herd.

Rabobank analysts forecast a 3% decline in U.S. beef production in 2023 compared to 2022 and another 2% to 5% decline in the following three years.

“With U.S. cattle producers thinning cow herds … and relatively small gains in Mexico’s cow numbers offsetting declines in Canada, the North American beef cow herd will be down 2.5 million head from its January 2019 highs, and the 2014 lows will be revisited by 2024,” the analysts said in the latest Global Animal Protein Outlook.

Fewer cows result in fewer calves and fewer cattle for slaughter.

“Expect beef production to decline in 2023 and to continue to decline as herd rebuilding keeps heifers and cows in pastures, away from processors,” the analysts said.

They expect the lower U.S. beef production to cause a shift in global trade.

“In the near term, growing beef production from key global exporters likely won’t fill the void left by the U.S.,” they said.

In all likelihood, lower U.S. exports over the next several years will be compounded by stronger demand for imported beef by U.S. consumers as domestic supply shrinks, the analysts said.

They expect U.S. exports to fall 91,000 metric tons, or 6% in 2023, with a potential for a 130,000 metric ton decline annually over the next several years. Imports could grow an average 40,000 metric tons per year in the same period.

Fewer cattle led to higher cattle prices in 2022, which continued to trend higher from the pandemic-induced lows. But producer profitability has been threatened by near record-high feed and forage prices and limited feedstuffs availability, the analysts said.

As for pork production, Rabobank expects some improvements in North American production.

After roughly two years of health challenges in hog herds, stronger biosecurity protocols and increased herd immunity will drive production higher despite little or no expected growth in the sow herd, they said.

They forecast a 0.2% increase in U.S. pork production year over year in 2023 and a 3% increase in Mexican pork production while Canadian production remains flat.

They also expect U.S. broiler production to increase 0.8% due to productivity gains in late 2022 and a shift to larger bird weights.

While meat and poultry producers will continue to face high feed costs in 2023, poultry producers are generally better at managing the impact due to efficient feeding and shorter production cycles. Beef and pork producers face greater challenges, the analysts said.