Bullish supply fundamentals and extraordinarily resilient consumer beef demand continue pushing cattle prices higher.

For perspective, the five-area direct weighted average FOB live fed steer price the last day of July was $243.08/cwt. The dressed delivered fed steer price at $383.60.

The previous week, cash prices for steers weighing 600-700 pounds in the South Central region were $81.46/cwt. higher year over year at $370.33, according to USDA’s National Weekly Feeder and Stocker Cattle Summary.

That was with year-to-date estimated total cattle slaughter of 16.7 million head, which was 1.2 million head less (-6.5%) than the same time last year. Estimated year-to-date beef production of 14.6 billion pounds was 513.2 million pounds less (-3.4%).

Looking further ahead, USDA’s Economic Research Service (ERS) raised expected feeder cattle prices for the remainder of this year and next in the July Livestock, Dairy and Poultry Outlook, based on recent price data and continuation of the import ban on Mexican cattle.

Compared to the previous month, ERS increased the projected average feeder steer price $6 in the third and fourth quarters to $312/cwt. and $314, respectively for an annual average price $3.51 higher at $301.29. Estimated prices for the first quarter next year also increased $6 to $307 for an annual 2026 average price $6 higher at $312.25. Price are basis a Medium and Large #1 steer weighing 750-800 lbs., trading at Oklahoma City.

The ERS left projected average five-area direct fed steer prices unchanged for the remainder of this year, compared to the previous month, in the July World Agricultural Supply and Demand Estimates (WASDE). Prices were forecast at $226/cwt. in the third quarter and $229 in the fourth quarter for an annual average of $221.31. Next year’s forecast annual average price was $229 with $227 in the first quarter.

This year’s beef production was estimated to be 170 million pounds less than the previous month at 26.2 billion pounds. The total would be 796 million pounds less (-2.9%) than last year.

Likely herd rebuilding

USDA issued the mid-year Cattle inventory report near the end of July. The report was cancelled last year, so these comparisons for July 1 are relative to the same time in 2023.

Beef cows numbered 28.7 million, which was 350,000 head fewer (-1.2%) than two years earlier but 1% more than expectations ahead of the report. Beef replacement heifers of 3.7 million head were 100,000 head fewer (-2.6%).

All cattle and calves of 94.2 million head were 1.2 million head less (-1.3%) than the same time in 2023, slightly more than expected.

USDA published the July Cattle on Feed report the same day. Feedlots with 1,000 head or more capacity placed 1.4 million head in June, which was 123,000 head fewer (-7.9%) year over year and 6% fewer than expectations ahead of the report.

Cattle on feed July 1 of 11.1 million head were 180,000 head fewer (-1.6%) year over year, which was 1.6% less than expectations. The 4.2 million heifers on feed were 5% less year-over-year.

Depending on who is interpreting the two reports, the mad dash for calves and feeder cattle, reduced cow slaughter and a declining percentage of heifers on feed, it appears herd rebuilding has begun.

More specifically, heifer slaughter is 3.5% less year over year so far in 2025, while beef cow slaughter is 16.5% less, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his late-July weekly market comments. 

“If the current beef cow slaughter rate persists for the remainder of the year, herd culling in 2025 may drop below 9.0%, a level that is certainly consistent with herd rebuilding,” Peel says. 

Likewise, Matthew Diersen, risk and business management specialist at South Dakota State University points out heifers represented 38.1% of all cattle on Feed July 1.

“The mix has been hovering around 39% for several years,” Diersen says in a recent issue of In the Cattle Markets. “The mix bottomed out at around 31% in mid-2015 during the last cattle expansion. The mix had been getting lower, especially last quarter when it reached 37.6%. An increase from April 1 to July 1 is consistent over time. The mix is the smallest it has been on July 1 since 2019 and would be the slightest indication that some expansion is being considered.”

Considering the July Cattle on Feed and the Cattle reports together, Peel says there is no indication of significant heifer retention. 

“My feeling is that some movement towards herd rebuilding may be starting but is very slow and cautious,” Peel says. “It is possible, perhaps even likely, that the January 2025 beef cow herd will be the cyclical low, but the January 2026 inventory will likely be close to unchanged showing very little, if any, growth this year.”  

Moreover, Peel points out drought conditions have diminished significantly in much of the eastern two-thirds of the country and have improved during the past two months in Texas, Oklahoma, Kansas, Nebraska and South Dakota. At the same time, he explains drought continues to expand and deepen in the west, Pacific Northwest and across the Northern Plains areas of Montana and North Dakota.

“Although some producers are still being impacted by drought, most of the current drought regions have relatively low beef cow numbers and would not offset increases in other regions,” Peel says. 

Trade uncertainty hampers U.S. beef exports

Exports of U.S. beef and pork trended lower in May, due primarily to steep declines in shipments to China, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). 

Beef exports totaled 97,266 metric tons (mt) in May, down 12% and the lowest in nearly five years. Export value was $798.7 million, down 11.5% and the lowest in 18 months. But exports to leading market South Korea were strong, posting the largest monthly volume in more than two years and the highest value in nearly three years. 

May beef exports to China plunged to just under 1,400 mt, down 91% from a year ago. Export value fell 90% to less than $15 million.

“The situation with China obviously had a severe impact on May exports, underscoring the importance of diversification and further development of alternative markets,” said USMEF President and CEO Dan Halstrom. “The need for progress in the U.S.-China trade negotiations is extremely urgent because tariffs could soar again on Aug. 12. This deadline is already impacting exporters’ decisions about whether to continue producing for the Chinese market. On the bright side, amid all this uncertainty, demand for U.S. red meat remains robust in many key regions.”