Cattle price ride out tariff confusion

Cattle markets continue to mostly fade the heat of tariff confusion, eroding consumer confidence and increased uncertainty and volatility.

Moreover, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says cattle markets are expected to continue strong, barring major macroeconomic disruption, such as domestic recession.

At the same time, Peel expects uncertainty and volatility driven by external forces to continue impacting markets. 

“Cattle prices continue to generally grind higher amid a whirlwind of political activities and rhetoric that have buffeted markets at all levels,” Peel explains, in his early-March market comments. “Markets have been whipsawed with on-again, off-again political announcements that create debilitating uncertainty in equity, futures and cash markets with negative impacts on producers, consumers and the complex supply chains of agricultural and food markets.” 

Prices ahead

Recent price projections from USDA’s Economic Research Service continue to project cattle prices this year on the upper end of history.

Compared to the previous month, the ERS projected the five-area direct weighted average fed steer price $3 lower in the first quarter at $202/cwt. and $2 lower in the second quarter at $198, based on recent prices. That was in the March World Agricultural Supply and Demand Estimates. Prices were forecast at $198 in the third quarter and at $200 in the fourth quarter for an annual average price of $200, which was $1 lower than the previous month’s outlook.

Forecast beef production increased by 120 million pounds (0.5%) to 26.7 billion pounds with heavier dressed weights more than offsetting lower slaughter. This year’s projected beef production would be 303 million pounds less (-1.1%) than last year.

As for feeder cattle, the ERS left the expected annual price for feeder steers unchanged at $273.75/cwt., in the February Livestock, Dairy and Poultry Outlook. However, they raised the expected first-quarter price by $4 to $272. Expected prices were unchanged for the second quarter at $272 but declined by $2 in the third and fourth quarters to $273 and $278, respectively. Prices are basis Med. And Lg. #1 steers weighing 750-800 lbs., selling at Oklahoma City

“In addition to incorporating the resumption of feeder cattle imports (from Mexico) into the forecast, the Cattle report showed more head than previously expected outside feedlots on Jan. 1, albeit still less than a year ago,” ERS analysts say. “The increase in the cow/calf ratio was carried over into 2025 expectations, increasing prospects for a larger-than-previously-expected calf supply in 2025.”

Prices further ahead

USDA’s recently released Agricultural Projections to 2034 project peak cattle prices in 2026.

The five-area direct weighted average fed steer price rises to $196.49/cwt. next year from $186.50 this year in the projections and then declines to $150.65 in 2031, before increasing again.

Similarly, projections peg the average Oklahoma City feeder steer price next year at $267.26, up from $258.75 this year and then declining to $189.80 in 2031 before rebounding.

USDA analysts expect domestic cattle supplies to respond to higher prices early in the projection period, leading to expansion. Projections see the total cattle inventory at a low this year of 86 million head and then growing to 91.8 million head by 2033. However, projections call for beef cow numbers to reach a bottom next year at 27.8 million head — slightly fewer than this year — and then expanding to 30.6 million by 2031 before receding again.

Along the way, beef production declines from 25.9 billion pounds this year to 24.8 billion pounds in 2027 and then growing to 27.9 billion pounds in 2024. Analysts note, “Projections are premised on assumptions for normal weather which support improved pasture conditions following periods of widespread drought in recent years.”

Feed costs are expected to decline or remain static during the projection period.

“Corn prices are expected to start the projection period at $3.90 per bushel, or 38.0% below the recent peak of $6.54 per bushel in 2022/23,” analysts explain. “This downward trend reverses in 2026/27 and prices climb to $4.30 per bushel during the last half of the projection period. Growth in domestic corn use of 4.9% during the projection period is driven almost entirely by the feed and residual category, spurred by expanding corn supplies and meat production growth to meet domestic and export demand for beef, pork and poultry.”

Keep in mind the latest WASDE projects the season-average corn price for 2024-25 at $4.35 per bushel.

Macroeconomic assumptions underpinning the projections include U.S. real GDP growth at an annual average of 1.8%. Global GDP growth is projected to average 2.7%.

Beef demand continues strong

Domestic consumer beef demand continues at a strong pace, based on a recent reading of consumers’ willingness to pay for their protein of choice.

The Livestock Marketing Information Center (LMIC) provides an overview in the mid-March Livestock Monitor, based on February retail meat prices reported by USDA.

“The price of all fresh retail beef rose by 6.2% to $8.32 per pound, retail pork prices increased by 1.6% to $4.84 per pound and retail broiler prices climbed 5.1% to $2.05 per pound,” according to LMIC analysts.

Likewise, U.S. beef exports trended higher than a year ago to begin 2025, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). 

January beef exports reached 102,840 metric tons (mt), up 3% year over year, while value increased 5% to $804.6 million. 

“Demand for U.S. beef came on strong in the Asian markets late last year, and that momentum largely continued in January,” says Dan Halstrom, USMEF president and CEO. “The performance in Korea is especially encouraging, given the country’s political turmoil and slumping currency. It is also gratifying to see exports trending higher to China, though we are concerned about access to the market moving forward, as many U.S. beef and pork plants are awaiting word on their eligibility beyond mid-March.”

Referring to recent tariffs, Halstrom emphasizes that duty-free access to Mexico, Canada and other free trade agreement partners has underpinned global demand for U.S. red meat and delivered essential returns at every step of the supply chain.

-30-