Cattle Prices Soar as Beef Supply Tightens

Nearly six years of herd liquidation paired with strong demand for high quality beef meant record high prices across the cattle industry in 2024. While elevated prices are likely to last several more years, signals are pointing to a shift in the market, according to CattleFax, an outlook firm that specializes in meat markets. They presented their latest industry outlook at CattleCon in Texas this week.

Despite an anticipated tightening of beef supply in 2026 and 2027, price increases may hit their peak this year. “The futures market’s job is to anticipate and price things well ahead of time,” said Randy Blach, chief executive officer for CattleFax. 

Here’s the price outlook for 2025 from CattleFax: 

• Fed steers: $198/cwt, up $12 from 2024. Tighter supply of feeder cattle may drive aggressive bidding, reducing profitability.
• Feeder steers (800 pounds): Animals ready for final finishing in a feedlot will average $270/cwt, up $22 from 2024. Prices will likely be supported by higher breakevens.
• Steer calves (550 pounds): Recently weaned calves headed to stocker grazing operations will average $340/cwt, up $29 from 2024. Heifer retention may tighten supplies further. Weather and grazing conditions will also impact price.
• Utility cows: Culled cows will average $140/cwt, up $14 from 2024. Prices will be supported by strong demand for lean trim and reduced non-fed slaughter numbers.

Time To Expand? 

Early 2025 is expected to see a cycle low for the U.S. beef herd. The projected 28 million head is 200,000 head below 2024 and down 3.5 million head from cycle highs seen in 2019. Declines in beef cow slaughter signal the end of aggressive culling and the beginning of herd stabilization. 

Strong margins for the cow-calf producer mean expansion could be coming, but drought concerns impacting pasture conditions may mean that expansion is slower than in previous cycles.

Capital, producer age, and labor cost and availability are just a few of the other challenges the industry faces. “We have record high calf prices and incentive to expand, but we have to take that with a grain of salt,” said Kevin Good, vice president of industry relations for CattleFax. “There are headwinds we have to overcome.” 

Cautious Optimism for Demand

Domestic demand for beef has significantly outpaced other protein sources since 1998, bringing more dollars directly to the production system. 

Last year, chuck and round cuts accounted for much of the increase in cutout values compared to profit. On the other hand, rib and loin cuts underperformed until the holiday season. This change indicates some consumers are opting for ground beef over steaks. 

That’s not to say consumers are not looking for quality. The data shows a continued willingness to pay more for choice and prime cuts. Relatively healthy unemployment rates are also an indication that consumers have discretionary money. 

“The consumer expects high quality beef day in and day out, and they expect it to be safe, nutritious, and a wonderful eating experience,” Blach said. 

However, high levels of consumer debt, elevated interest rates, and an uncertain political climate could reduce demand. While the outlook remains positive, risk management should be top of mind for producers. 

“We are absolutely optimistic about the demand equation, but at the same time we need to be prepared that it is a shifting wind,” Good said. “As far as our consumer is concerned, as long as employment stays where it is, we feel comfortable.”