Cattle prices expected to remain high in 2025 and 2026

Cattle-raisers have been enjoying booming prices for a while now, and Derrell Peel, Oklahoma cooperative Extension livestock marketing specialist, said they can expect more of the same for at least the next two years. Peel spoke on the beef economic outlook at the Central Oklahoma Cattle Conference on Feb. 14 in Stillwater, Oklahoma. 

Across the board, cattle prices remain high, although they saw a slight dip in early February. Peel said this short-term fluctuation was due to uncertainty from a macro and political standpoint, and prices are expected to rebound.  

“I’ve never known cattle markets to be dull, but you can make the argument that this is one of the more unique times that we’ve ever seen,” Peel said. “We’ve set new records for every class of cattle in terms of price level since the beginning of the year. We’ve already had two years of good prices at this point, and we’re moving into the third year, and it isn’t over yet.” 

Peel said the drought that started in 2020 moved around multiple parts the country over several years, impacting a broad area and leading to a slower rebuild than past drought events.  

Due to continued low inventory, Peel said cattle slaughter was down 3.1% last year. Although steer and heifer slaughter was fractionally higher in 2024 versus 2023, total cow slaughter dropped 15.4% last year. Beef cow slaughter fell 18.8%. 

“Fed beef production, which is about 85% of total beef production, actually went up about 2.8% last year, but non-fed beef coming from the cull cows and bull carcasses was down about 12% last year, and so total beef production was mostly unchanged,” Peel said. 

Cattle numbers 

On Jan. 1, the U.S. Department of Agriculture provided the annual cattle numbers for all states. There were 86.7 million head of cattle and calves in the U.S. Over the past year, the all-cattle inventory was reduced by 0.6%, beef cows decreased by 0.5%, and beef replacement heifers were down 1%.  

Peel said the national calf crop was somewhat unchanged last year, but it has been generally going down for the last six years. He is unsure if cattle numbers have hit the bottom of the barrel yet, or if there is still more of a herd decline to come.  

“From a beef cow standpoint, we’re currently at the smallest cattle inventory since 1961,” he said. “The all-cattle inventory and beef cow inventory peaked in 2019, and we’re smaller right now than we were in 2014 by about a million head.”  

Peel said the market’s response indicates it wants rebuilding to happen in the cattle industry, and that task falls on the cow-calf industry.  

“The market is really focused on providing incentives at the cow-calf level to rebuild this herd in this industry,” he said. “From that standpoint, everybody above the cow-calf level is a margin operator in this industry, and they are feeling a bit of margin squeeze.”  

Based on years of experience and comparing trends from the beginning of the herd rebuild in 2014, Peel said the early stages of cattle expansion could be on the horizon in states like Texas and Oklahoma. 

“If you look at the recent beef cow list, seven out of the top 10 states for beef cows were either the same or slightly bigger on Jan. 1, even though the national number was down 0.5%,” Peel said. “I don’t have any real analysis to support this, but my intuition is that that might be a leading indicator that we are thinking about trying to rebuild a little bit.”  

Feedlots 

Tight margins and low cattle availability have plagued the feedlot industry in recent years; however, feedlots have found ways to adapt and keep the ship afloat amid unprecedented circumstances. 

“If you look at the last 16 months, feedlots have been able to hold inventories pretty steady on a year over year basis,” Peel said. “Part of the reason for this is about 39% of all the cattle in feedlots are heifers, and it has been that way for the last several years.”  

Peel said the percentage has dropped in the most recent quarter, but it will have to continue to decline before he can be sure those heifers are not going to the feedlot and instead are being retained to rebuild the cow herd. Another reason feedlots have been able to stay full is they have slowed down the turnover rate by feeding the cattle for a longer period.  

“That’s why feedlot inventory is not a good measure of supply,” he said. 

According to Peel, packers are also incentivizing feedlots to extend time on feed by not enforcing heavyweight carcass discounts because they need the poundage the market is demanding. 

“Last year carcass weights for steers jumped about 23 pounds on average, which is a huge jump for one year,” Peel said. “We’re probably going to maintain those heavier weights, at least for a while, but I don’t think we’ll add another 23 pounds for carcass this year.” 

Peel said the overall numbers indicate feedlot inventories have to come down, and, most likely, more than a million head will be dropped for the industry to rebuild the cattle herd. 

“We’ve got two options with heifers,” Peel said. “You can either eat them or breed them, but you can’t do both.” 

When will a rebuild occur? 

In 2022 and 2023, more than 51% of all the cattle slaughtered in this country were cows and heifers—which has not happened since 1986. Peel said although that number had dropped over the last year, the overall decrease in female slaughter was due to fewer cows slaughtered, not heifers. The sustained heifer slaughter will continue to delay the rebuilding of cattle numbers.  

“One of the scariest things I can tell you is that we’re at record high prices coming into 2025, and we expect them to go up on average, in 2025 and at least into 2026,” Peel said. “I’m not saying that it’ll be over by then. I’m just not willing to go out any further on the chart. We’ll eventually produce our way back into lower prices, but it just can’t happen that fast.” 

Peel said the total inventory of replacement heifers was down 1% in 2025. For the herd expansion to begin, the number of bred heifers calving this year has to balance cow culling.  

“Cow culling would have to drop substantially more than it already has the last two years in order to stabilize the herd at the current low levels,” he said. “I don’t think growth is an option at all for this year.”  

Although he believes the industry is headed in the right direction, Peel said rebuilding takes time, especially with multiple factors contributing to slow growth, such as future drought concerns and input costs. 

“If you look down, there’s a whole lot of empty air below us that can cause problems in the short run,” he said. “In the volatility and uncertainty that we’re in today, it will be extremely likely that we will have short-term dips in the market, but it will bounce back.” 

Peel recommends cattle producers plan out their marketing windows so that they are not forced to sell cattle during slumps in the market. With these record prices, he suggests cattle-raisers use risk management tactics, such as livestock insurance, to protect their herds for catastrophe. 

“I’m as scary bullish as I’ve ever been on this industry,” Peel said. “At the same time, you should expect volatility. We’re flying high. Fasten your seat belts because we expect some turbulence going forward.” 

Lacey Vilhauer can be reached at 620-227-1871 or lvilhauer@hpj.com.