Market volatility ratcheted higher last month as cattle imports from Mexico resumed, a new strain of bird flu was confirmed in dairy cattle and uncertainty tied to political risk increased.Even so, prices remain near historic levels with the promise of more of the same, fueled by declining cattle numbers and strong consumer beef demand.

CattleFax analysts painted a bullish picture at the organization’s recent Outlook Seminar during CattleCon 2025 in San Antonio, Texas. 

Mike Murphy, CattleFax chief operating officer, forecasted the average 2025 fed steer price at $198/cwt., up $12/cwt. from 2024. All cattle classes are expected to trade higher and prices are expected to continue to trend upward. The 800-lb. steer price is expected to average $270/cwt.,   the 550-lb. steer price is expected to average $340/cwt. Utility cows are expected to average $140/cwt., with bred cows at an average of $3,200/head.

Likewise, USDA’s Economic Research Service (ERS) increased the expected five-area direct weighted average fed steer price for this year — especially in the first half —in the February World Agricultural Supply and Demand Estimates (WASDE).

Based on recent prices and continued beef demand strength, ERS increased the forecast price by $11 in the first quarter to $205/cwt., by $6 in the second quarter to $200, by $2 in the third quarter to $198 and by $2 in the fourth quarter to $200. The projected annual average price increased by $5 to $201.

Expected beef production also increased by 775 million pounds (+3%) to 26.6 billion pounds, compared to the previous month’s estimate. This year’s projected beef production would be just 423 million pounds less (-1.6%) than last year.

In addition to the recent resumption of beef cattle imports from Mexico, ERS analysts cited the larger estimated calf crop than expected and the smaller decline in cattle outside feedlots than expected, in the recent Cattle report. As a result, ERS analysts say, higher placements are expected for the year and projected slaughter is raised, primarily in the second half of the year.

“While the cyclical upswing in cattle prices is expected to persist, the industry must prepare for market volatility and potential risks,” Murphy says. “Producers are encouraged to adopt risk management strategies and closely monitor developments in trade policy, drought conditions and consumer demand.”

Demand leads the way

Robust consumer beef demand continues to underpin the market and is expected to continue.

Beef prices averaged $8.01/lb. last year, the second-highest demand level in history, according to CattleFax. While demand may ease slightly this year, they say retail prices are still expected to rise to an average of $8.25/lb. Wholesale prices will follow suit, with the cutout price projected to reach $320/cwt.

“Retail and wholesale margins are historically thin, making strong consumer demand essential to maintaining higher price levels,” according to Kevin Good, CattleFax vice president of market analysis. “While opportunities for further leverage gains are limited, the market remains favorable for producers.”

Although price inflation remained moderate in 2024, high consumer debt, elevated interest rates and competition from more affordable protein options could impact purchasing decisions, according to CattleFax. However, foodservice demand showed resilience, ending the year stronger, as same-store sales and customer traffic improved.

“Despite economic pressures, consumers continue to pay premiums for higher-quality beef,” Good says. “Choice grade or better remains in high demand, reinforcing the strength of the premium beef market.”

Beef exports gain traction

U.S. beef exports in December were 1.5% more year over year at 110,171 metric tons (mt). Beef export value of 897.6 million was the highest since July and 4% more year over year, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).  For 2024, beef exports were 0.5% less year over year at 1.29 million mt, while export value was up 5% at $10.45 billion.

“Considering the formidable headwinds in the large Asian markets – especially in the first half of the year – and the challenges on the supply side, beef exports exceeded expectations in 2024,” says Dan Halstrom, USMEF president and CEO. “The economic climate in Asia has shown modest improvement, and in the meantime, demand for U.S. beef strengthened in other regions, including double-digit growth in Mexico. The U.S. beef industry continues to export a steady percentage of production at higher prices, as evidenced by export value per head of fed slaughter reaching $415. U.S. beef always sells at a premium internationally and the strong U.S. dollar contributed to further increases in pricing in local currencies. So, the 2024 results confirm that global demand is extremely resilient.”

Market diversification also paid dividends for beef exports, which achieved annual volume and value records in a number of emerging markets, including the Dominican Republic, Guatemala, Honduras, Panama, the Leeward-Windward Islands, Netherlands Antilles, Turks and Caicos, Cuba, Guyana, Singapore and Morocco. Value records were reached in the Bahamas, Bermuda, Qatar, Jordan and Bahrain.

Expansion plans simmer

USDA’s Cattle inventory report published at the end of January provided more clarity about herd expansion potential.

For instance, the total cattle inventory of 86.7 million head Jan. 1 was down 0.6% year over year, which was 1.8% less than the recent cyclical low in 2014 and the least since 1951, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his early-February market comments. He added the inventory of cattle and calves has declined 8 million head (-8.5%) since the cyclical peak in 2019.

The beef cow herd Jan. 1 numbered 27.9 million head, which was 0.5% less year over year. That was 3.8% less than the previous low in 2014 and the fewest since 1961, according to Peel. He explains the beef cow herd is 3.8 million head fewer (-11.9%) since the recent peak in 2019.

“Cow culling will determine herd dynamics in 2025,” Peel says. “It depends both on what producers are trying to do and what Mother Nature will let them do – drought is still a large threat.”

Moreover, Peel explains heifer retention this year can set the stage for herd expansion beginning ion 2026.

“The inventory of replacement heifers suggests that there are few plans for increased heifer breeding going into 2025, but impulse heifer breeding during the year may result in additional bred heifers for 2026,” Peel says.  “As with cow culling, it will depend on what producers are trying to do and whether drought limits those plans.”

Given that the pool of bred heifers was 1.7% less year over year Jan. 1, Peel explains cow slaughter will have to decrease at least 7% year over year to hold the beef cow inventory stable.

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