
Like fireworks on New Year’s Eve, cattle and beef markets started 2025 with a bang as feeder and fed cattle all pushed to record highs in January with continuing strength.
Though cattle numbers continued to tighten in 2024, some of the market fundamentals were masked by mostly steady year-over-year feedlot inventories and more beef production than previously expected.
Cattle prices started this year at record levels and are expected to continue to move higher, supported by continued tightening of cattle and beef supplies. That said, macroeconomic and political uncertainty have considerable potential to inject volatility into cattle and beef markets.
What’s driving the markets?
Total beef production in 2024 was almost unchanged, up 0.1% year over year, despite expectations a year ago of beef production declining 4% to 5% annually.
Fed beef (from steers and heifers) makes up about 85% of total beef production. It was up 2.8% year over year because of surprisingly strong steer and heifer slaughter (up 0.3% year over year), combined with sharp increases in steer and heifer carcass weights.
However, non-fed beef production was down 12.7% year over year due to sharply lower cow and bull slaughter. Beef cow slaughter was down 18.8%, along with a 11.4% year-over-year decrease in dairy cow slaughter. Thus, increased fed beef production more than offset sharply lower non-fed beef production.
Beef production is once again expected to decrease sharply in 2025 — in the range of 4% year over year.
Fed steer and heifer slaughter is expected to decrease compared to last year. The amount will depend on whether heifer retention starts and how fast it is.
Impact of heavier cattle
While carcass weights are expected to remain high and may increase slightly over last year, they are unlikely to increase as much as last year. Both beef and dairy cow slaughter may decline again in 2025, but not as much as in 2024.
Feedlots held monthly inventories mostly steady on a year-over-year basis from late 2023 through 2024. Continued heifer feeding and extending days on feed allowed feedlots to maintain inventories despite a general decline in total placements.
Having established a slower turnover rate with additional days on feed, it is likely that feedlot inventories will begin to decline in the coming months as tighter feeder supplies become more evident.
Again, this will accelerate if heifer retention begins this year. This will lead to reduced steer and heifer slaughter and decreased beef production going forward.
Manage market uncertainty
Cattle market conditions favor herd rebuilding, but drought potential remains a threat, and producers remain prudently cautious.
Little or no herd rebuilding is anticipated in 2025, but the industry could lay the groundwork for slow herd rebuilding beyond this year.
Current markets provide strong returns for cow-calf producers and margin challenges for other industry sectors. Volatility remains a threat, and producers are advised to maintain risk management practices to protect marketing windows.
Peel is a livestock marketing specialist at Oklahoma State University Extension. He also works in the area of international livestock and meat trade.
About the Author
You May Also Like