At the time of writing this column, the temperatures have been brutally cold in my home state of Montana. After a relatively mild, dry and warm fall and start of winter, Mother Nature showed up with a vengeance and reminded us of what winter is. Temperatures have dipped down to over 30 below zero and areas are reporting having multiple feet of snow. No doubt this has made feeding cows a daily struggle and those with heifers calving are in a full-on battle to keep calves alive, let alone with full ears and tails. Good equipment, facilities and plans are worth their weight in gold.
Despite how extremely cold it is outside, the cattle market is extremely hot! Producers will be rewarded for all the hard work they are putting in this February when the time comes to market these calves. At the beginning of the month, CattleFax gave its annual report to the attendees of the CattleCon convention in San Antonio, TX. Mike Murphy, CattleFax chief operating officer, provided some forecast numbers for 2025. Projections for the fed steer price are flirting with the $200/cwt mark with the 2025 projections at $198/cwt. This is a $12/cwt increase from 2024! Accordingly, all classes of cattle are projected to be higher in 2025 with the 800-pound steer price projected to average $270/cwt, the 550-lb. steer price projected to average $340/cwt, cull cows at $140/cwt and bred cows at an average price of $3,200 per head. It appears the strong market we all experienced in 2024 is going to keep the momentum going into 2025.
Another bright spot highlighted by CattleFax was margins for the cow-calf producers. Those of us who make a living off the grass know that despite the fact of record prices recently, we are also experiencing record input costs. Margins have been slim for producers as it’s simply a matter of more money in and more money out to keep these ranches going. However, CattleFax expects margins to be stronger in 2025 for this sector of the industry as inputs have seem to stabilized following the huge runups since 2020. Inflation and inputs are expected to be more predictable and manageable in 2025.
Even with these rosy scenarios playing out, I do not think this is a time for cattle producers to be lackadaisical in their management decisions. Explore risk management decisions that can be beneficial to our operations. The opportunity to utilize the Livestock Risk Protection program should be looked at and understood thoroughly to see if that can help mitigate risk from potentially large market fluctuations. Another option is to take advantage of summertime video auctions to forward contract your calves if you have load lots to market. If the opportunity exists to wean your calves, it really paid off for producers this year.
Another valuable part of every cattle producer’s herd is using good genetics. Maybe this market can give you the opportunity to purchase a higher quality bull that will help improve your herd in the future. The final piece of advice I will give is to make sure to take a holistic look at your finances and make sure you have your tax planning, debt payoff, compensation and all other financial factors in place this next year. Heck, maybe there will be enough left over to take your family on a vacation!
Looking into the future and predicting what this market might be like beyond 2025 is more of a stretch. The cattle cycle used to be more predictable with how producers would react with higher markets. I firmly believe that the movements of the cattle cycle are not going to follow the same trends as the past. Talking with producers and watching their marketing decisions has seen more heifer calves being sold into the market with the majority going on feed to make up for the fewer number of steers available to fill feedlot pen space. Replacement heifers are being kept, but not at the rate needed to rebuild cattle numbers. Dispersions are still happening at record rates. Who can blame a rancher who is nearing retirement with no family to take over the place for taking advantage of these prices?
All in all, it looks to me like the 1% decrease in beef cattle numbers we have comparing 2025 to 2024 is real and we will have a hard time increasing supply enough to drive the market down to unprofitable levels. Keep your chin up if you are battling through snowbanks to keep the cows fed and know the extra effort you are putting in to keep those calves warm and dry is worth it. Stay safe, stay warm and safe travels. I hope to see you all down the road at a bull sale this spring. — DEVIN MURNIN
