Relatively low prices of competing meats, and other factors related to changing consumer tastes and preferences for beef, led to the decline in beef demand. Prior to 1979, the long-term trend in the U.S. cattle sector was for inventories to increase. At each cycle's trough the cattle and calves inventory was larger than the lowest inventory during the previous cycle and each successive inventory peak was greater than the previous cycle's peak. The cattle inventory peak during the 1979-1990 cycle was the first time the cycle's peak failed to establish a record high. In addition, the 1990 cattle inventory estimate marked the first time an inventory trough fell below the previous cycle's trough.
Cattle cycles occur in large part because of the biological nature of production.
Cow-calf producers respond to profitable calf prices by holding back more replacement heifers and not culling as many cows. The increase in cow numbers leads to more calves for the next year. But additional heifers held back for entry in the cow herd won't increase beef production for about three years. Eventually, the increase in the cattle inventory and, subsequently, beef supplies leads to lower prices. Herd liquidation continues until prices return to profitable levels.