CattleFax forecasts continued strong demand, high price outlook for cattle producers 

The CattleFax Outlook Seminar wrapped up the last day of CattleCon 2025 in San Antonio, Texas, and experts shared thoughts on markets and weather Feb. 6. 

The National Cattlemen’s Beef Association said in a news release the United States beef industry is poised for another year of strong market performance, driven by tight cattle supplies and robust consumer demand. Following years of contraction, the beef cowherd is starting to stabilize, working in cattle producers favor. 

Meteorologist Matt Makens told attendees during his segment a La Nina winter will bring volatile weather changes across North America, with the majority of weather extremes affecting those in the central to eastern U.S. Those in Mexico and the southwestern U.S. will see drought acres increase like it has since last June. 

“Drought will likely increase across the western U.S. this spring and into the Pacific Northwest, Northern Plains, and Canadian Prairies through this summer,” Makens said. “(Areas) to watch will be the North American monsoon and how much drought relief it can provide to Mexico, the Southwest, and parts of the Plains.” 

Current data shows monsoon season will likely produce more moisture in 2025 that it did last year. 

“A strong enough monsoon can decrease precipitation across the central Corn Belt,” he said. “Watch July closely. Late in the year, the focus turns to the development of La Niña or El Niño.” 

Economy, energy and feed grains

Troy Bockelmann, CattleFax director of protein and grain analysis, noted during his segment of the outlook session that inflation eased in 2024, ending the year at 2.9%, a significant drop from the 9% peak in 2022 but still above the Federal Reserve’s 2% target. To address this, the Fed cut interest rates three times in the latter half of the year, bringing the prime bank loan rate to 7.5%. 

According to NCBA, the labor market remained strong, with unemployment briefly rising midyear before falling to 4.1% as job creation outpaced expectations. Combined with solid consumer spending and wage growth, the U.S. economy is expected to see healthy gross domestic product growth of 2 to 2.5% in 2025. 

“The Federal Reserve’s rate cuts helped stabilize inflation and support economic growth, but we’re still above target,” Bockelmann said. “Despite economic headwinds, consumer confidence and spending have remained resilient.” 

Lingering inflation and potential trade uncertainties could limit further interest rate cuts. Inflation remains something to watch in 2025.  

CattleFax shared the national Dec. 1 on-farm hay stocks were up 6.3% from a year-ago at 81.5 million tons with hay prices averaging $175 per ton in 2024. Corn stocks-to-use at just over 10% and should support the spot market toward $5 per bushel with a yearly average spot future price of $4.40per bushel expected. Bockelmann expects an increase in corn supply for the new crop year as the beginning stock number is smaller. This could be offset by larger production levels due to corn regaining acres from soybeans. 

“Stocks-to-use have the potential to be above 13%, which implies a price range of $3.75 to $5.15 a bushel for the 2025 market year,” Bockelmann said. “There is a strong correlation between corn stocks-to-use and hay, and we expect hay prices to follow corn and trend a bit higher in the coming year. 

Not much will change on the energy front for 2025, he noted. Average crude oil prices are expected to be near steady with 2024, though risk remains for a reduced U.S. market share of global product due to potential trade policy impacts. He also expects ethanol production to continue to stay strong. 

Beef market analysis

Kevin Good, vice president of market analysis at CattleFax, reported the U.S. beef cow herd is expected to see the cycle low to start 2025 at 28 million head, 150,000 head below last year and 3.5 million head from the 2019 cycle highs. 

“We expect cow and bull slaughter to continue declining in 2025, with overall numbers down by about 300,000 head to 5.9 million head total,” he said. “Feeder cattle and calf supplies outside of feedyards will also shrink by roughly 150,000 head, while cattle on feed inventories are starting the year slightly below 2024 levels at 11.9 million head.” 

With a tighter feeder cattle supply, pace of placement will be limited, and Good expects there to be about a 700,000 head drop in commercial fed slaughter numbers, reaching 24.9 million. 

“After modest growth in 2024, beef production is expected to decline by about 600 million pounds to 26.3 billion in 2025, ultimately reducing net beef supply per person by 0.8 pounds,” he said. 

In 2024, beef prices averaged $8.01 a pound, the second highest demand level ever recorded. He does see demand easing some in 2025, but retail prices to rise to an average of $8.25 a pound. Wholesale prices will follow suit, with the cutout price projected to reach $320per hundredweight. 

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

Economic conditions

CattleFax experts called inflation moderate in 2024, and factors like high consumer debt, elevated interest rates and more affordable protein option competition will likely impact purchasing. Foodservice demand is a little more resilient, as there was stronger same-store sales and traffic. 

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

Turning to global protein demand, Good noted that the outlook for animal proteins remains strong, although U.S. beef exports are projected to decline by 5% in 2025 due to reduced production and higher prices. Conversely, U.S. beef imports are expected to grow as lean beef supplies tighten. 

“The global outlook is currently an interesting scenario as trade policy developments, including potential tariffs, could pose risks to international markets. While growth is expected this year, it may be limited to global competition supply constraints and an uncertain tariff environment,” Good said. 

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

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

The 2025 U.S. Department of Agriculture’s All-Fresh Retail Beef prices are expected to average $8.25 per pound and, which will continue the balancing act for retail between high prices and reduced supply. Murphy noted the key is to avoid setting prices too high, especially in light of competition from more affordable proteins. 

Positivity

Randy Blach, CattleFax chief executive officer, concluded the session with an overall positive outlook, and noted that strong margins in the cow-calf sector have set the stage for cowherd expansion to begin, with heifer retention likely back near a more normal pace, relative to minimal retention in recent years.  

Drought and pasture conditions are now the key factors influencing the rate of expansion with a slower herd rebuild anticipated compared to the last cycle. This more measured expansion pace implies a positive outlook for producer returns over the next several years. Strong consumer demand also remains a bright spot for the industry. 

“We have to remember where we came from,” Blach said. “Continued improvements in quality and meeting consumer expectations with a safe, nutritious product and a consistently good eating experience have had tremendous impacts on moving the needle for this industry. We’re moving in the right direction, and we need to keep paying attention to that signal.” 

Kylene Scott can be reached at 620-227-1804 or kscott@hpj.com.