The holidays are over and we hope everyone had a great year and is ready for what appears to be another good year in the cattle business. A lot of beef was consumed over the holidays, and we need to thank the retailers for moving it. Most retailers offered whole prime ribs at $5 a pound, perhaps the lowest price we’ve seen at the retail level in years.
Slaughter levels were good during November and December; beef demand was excellent because consumers received a great deal. In some cases, prime rib was less expensive than ground beef. We’re getting close to seeing $200-plus fed cattle prices and the futures markets are responding to the cash markets.
There is no doubt that packers had a tough year. They collectively processed 1.7 million fewer cattle than 2023 but beef production was only six-tenths of 1% lower than the prior year. Heavy carcass weights and lean beef imports filled the gap. Beef production was almost 27 billion lbs. for 2024 and has been forecast to drop 1.4 billion lbs. in 2025.
Everyone is expecting another banner year for beef producers. Calf prices are forecast to be around $350, 700-800-lb. yearling steers are expected to average $275 and fed cattle are expected to average $192, and feed costs are relatively low. Seems like a no-brainer, but there is always a black swan event lurking in the background, and I would suggest that we pay attention to risk management or margin management.
We know there will be fewer cattle to process, both fed and non-fed cows. We will continue to see beef imports higher, feeder cattle imports about the same and fed cattle may even get bigger; the industry always appears to have a way of meeting consumer demand. Remember, 60% of beef production is consumed as ground beef.
The big question for 2025 is how many heifers will be retained to go back into the national beef cattle herd. Last year, heifer calves and yearlings were worth a lot of money and cattle raisers needed the revenue to make up for a few dry years and deal with serious inflation. How many heifers will be bred next year? Some observers say we need 500,000 more heifers held back. The bred heifer market has been good the past month, trading between $2,800 to $3,800 depending on quality and other attributes.
Will you be better off to buy them or raise them yourselves? It’s all about time and money. Then let’s throw Mother Nature in the mix. We have had reasonably dry weather in the Intermountain West and drought could creep back into the picture. I hope not, but things don’t feel right on my moisture meter, which is intuition. So, let’s do what we can and pray for rain and snow, and those important spring rains.
The Ag Center’s Cattle Report posted a year end wrap up: “This year will not see the cattle market jump through the benchmark $2 level, but it did touch it. It did other amazing things like produce tonnage equal to 2023 despite forecasts calling for smaller beef supplies in 2024. The magic was accomplished with increased marketing weights for fed cattle prompted by cheaper feed and reduced turnover. It also relied on the new growth of the dairy/beef cross animals that are providing new sourcing for quality beef production. Each year produces surprises in the cattle complex reminding people that the cattle markets are dynamic not static like grain. Grain farmers only raise a fixed amount of grain during the year and the number never changes as the grain is consumed.
“The year end will be the time for a new inventory of the national herd of cattle. The mid-year cattle inventory has been discontinued due to budget constraints. This makes the year-end report more meaningful, but questions are always present about the reports accuracy and until mandatory identification is in place, those questions will always be present.
“The challenge for operators in the beef pipeline during 2025 will be margin management. High prices translate into high risks. The notion that so long as the herd rebuilding is in progress, cattle prices will continue to rise may be a flawed assumption. The land mines of waning consumer demand, bird flu in the beef herd, increasing beef imports, declining exports and other obstacles can throw a monkey wrench into the best laid plans.”
It should be a good year ahead for this industry, but caution is required. Pray for rain. — Pete Crow, WLJ publisher emeritus
