Reflecting on 2024, cattle inventories continued to decline despite expectations that many producers might retain cattle and focus on rebuilding. Total 2024 beef production are forecasted to show an increase of 0.3% year over year, as opposed to initial estimates of a 3%-4% reduction. Beef production was bolstered by higher-than-expected slaughter rates and larger carcass weights. In 2024, carcasses averaged nearly 20 lbs heavier than the previous year. Despite ongoing concerns about reduced demand, retail beef prices increased by 3.5% year over year.
The ban on importing live cattle from Mexico into the U.S. due to New World Screwworm (NWS) remains ongoing as the two countries work to set up quarantine procedures. Highlighting the extent of the impact, USDA lowered their quarterly 2025 beef production forecast into Q4 2025. When cattle prices in the Southern Plains increased more than $15 per cwt during the month of December, the USDA also responded by increasing their 2025 cattle price forecast.
Beef production for 2025 is forecasted at 25.6 billion pounds, down 5% from the previous year. Cattle prices are forecasted to modestly increase, while domestic beef consumption is expected to decrease by 3.5% largely due to less beef production and higher prices.
Profitability
Cattle feeders: Profitable - Neutral 12-month outlook
Cow-calf producers: Profitable - Neutral 12-month outlook
Packers and feedlots will have to balance over-capacity against a continued tightening cattle supply. The cost of acquiring cattle will pose significant challenges for profitability. Scarcity may lead to intensified competition and higher prices, but lower feed costs will help mitigate high placement costs.
Historically high cattle prices and lower feed costs support long-term cow-calf profitability. However, consumer demand could pose headwinds if it doesn't keep pace with rising beef prices.
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