In my weekly coverage of the U.S. beef industry, I regularly report on the key supply and demand factors that face the U.S. beef industry. As we start the second half of the year, I thought it would be of value to outline the latest fundamentals. First and foremost, it is important to remind ourselves the U.S. cattle population is the smallest since 1951. The Jan. 1, 2025, herd total of 86.662 million head was down 0.6% from 87.175 million head. But the big difference between 1951 and 2024 is that 1951 produced 8.1 billion pounds of beef, versus 27 billion lbs. last year.
2024 was the sixth year of herd liquidation, with a decline of more than 8 million head. But the Cattle on Feed total has remained close to last year each month. The June 1 total was 11.442 million head, 98.8% of a year earlier. Slower than estimated feedlot marketings will keep the front-end supply above a year ago into December. Feedlots are holding cattle longer, hence record high carcass weights for this time of year. That’s the main reason why weekly slaughter rates have been mostly below 600,000 head this year. Only three weeks out of 25 weeks have been above 600,000 head. Packers are operating their plants only five days per week.
With live cattle in strong hands, fed cattle prices put in new record highs on a live basis until the week ended June 20. The five-area steer price that week averaged $238.91/cwt, up $2.29/cwt from the prior week’s record. This was up 24% from the same week last year and was up $31.21/cwt in the nine weeks. Dressed prices averaged $380.06/cwt, down $0.28/cwt from the record $380.34/cwt of the prior week. But the price was up 24.4% from the same week last year.
New World screwworm impact in May looked like having a significant impact on feeder cattle supplies from Mexico. A new ban on May 11 on the importation of Mexican cattle was forecast to boost live cattle prices in the summer when they normally decline. The new ban began after reports that the disease was spreading north from southern Mexico. Well over 1 million Mexican feeder cattle entered the U.S in 2024, with most going to southern Plains feedlots. However, Agriculture Secretary Brooke Rollins recently announced that cattle, bison and equines from Mexico will once again be eligible to enter the U.S. through a phased reopening of risk-based ports beginning as early as July 7.
The downturn in the herd size has been due to lingering drought, high input costs (including the cost of borrowing to finance heifer retention), the increasing age of cattle ranchers and their increased aversion to risk. Some modest beef herd rebuilding might show up this year because of record high live cattle and feeder cattle prices. But ranchers will remain wary of expanding too quickly and will need to see ample green grass.
Strong demand at home and abroad for U.S. beef is the main story so far this year. The domestic market takes 87% of all U.S. beef production. Retail beef prices were record high in April. Choice beef averaged $8.83/lb., up 8.3% on last year. The All-Fresh beef price averaged $8.50/lb., up 6.9%. Both prices eased slightly in May. Meanwhile, U.S. beef exports January through April were 3% below last year’s pace at 411,027 metric tons. But export value was down just 1% to $3.35 billion. This meant improved demand in value terms in overseas markets.
U.S. beef still faces a 32% tariff in China. But the bigger impediment is that China still has not renewed the certification for U.S. beef facilities, which expired in mid-March. This means the vast majority of U.S. beef is ineligible to ship to China, which has been the case for two months. The U.S. Meat Export Federation (USMEF) estimates that the beef industry could experience a $4.13 billion full-year impact if access to China is lost. But there has been no impact so far on U.S. cattle producers or beef demand.
Packers say they are finding new homes for beef that would have gone to China. For example, more short plates are now going to South Korea. Meanwhile, USMEF continues to diversify and grow markets for U.S. beef, from central and south America to Asian nations such as Vietnam and the Philippines. Brazil and Australia are the only major beef-producing countries where herd size and production is growing.
Regarding beef consumption, the figure averaged 59.1 lbs. per person in 2024 and will average 59.2 lbs. per person in 2025. It won’t increase above these levels unless U.S. beef production and beef imports both increase significantly. More cattle on feed might help per capita consumption increase but the key would be a lot more imported beef going into the hamburger trade. — Steve Kay, WLJ columnist
(Steve Kay is editor/publisher of Cattle Buyers Weekly, an industry newsletter published at P.O. Box 2533, Petaluma, CA, 94953; 707-765-1725. Kay’s Korner appears exclusively in WLJ.)
