Few surprises in Mid-Year Cattle Inventory Report

Tight cattle supplies are driving record-high prices across the West. USDA’s July 1 cattle inventory report confirmed expectations of a smaller herd compared to 2023. (No report was issued in 2024 due to budget cuts.) While declines in beef cow and calf crops were less severe than projected, beef replacement and other heifer numbers remain low, indicating a slow and ongoing contraction. Total cattle on feed, at 13.0 million head, reflects stable feedlot inventories without signs of significant expansion or contraction. However, this stability is overshadowed by a smaller overall herd, which continues to propel strong prices despite packer losses.

Carcass weights have also shifted. Between July 2023 and July 2025, average steer carcass weights have increased by approximately 50 pounds, reflecting adjustments producers have made to maximize value amid tighter supplies. This rise helps boost overall beef output slightly but does little to offset the supply constraints caused by a shrinking herd.

Summer livestock video sales in the West highlight the impact of these dynamics. Steers weighing 750–799 pounds averaged an impressive $3.30 per pound. Meanwhile, ranches are contracting 2025 calves for fall delivery at record prices, with steers and heifers combined averaging over $2,000 per head. These elevated figures underscore the sustained demand for cattle in the face of ongoing supply challenges.

The cattle industry has been eagerly anticipating signs of herd rebuilding, a process that historically occurred quickly but often drove significant declines in producer prices. This time, however, the rebuilding process will likely look different. Many aging producers are choosing to exit the industry. The most recent Census of Agriculture reported an average annual loss of 21,000 beef producers nationwide; a trend likely accelerated over the past 3 years due to market conditions that have created favorable opportunities for many ranchers to exit the industry. Producers still operating face significant challenges, such as the financial strain of securing capital to purchase replacement or stocker cattle. These barriers, coupled with a smaller national beef cow herd, are expected to slow the recovery process. Tight supplies and elevated cattle prices are likely to persist, shaping the industry’s landscape for the foreseeable future.

The cattle market’s outlook will hinge on the dual factors of tariff impacts and domestic demand for U.S. beef. To date, tariffs have had only a moderate effect. Beef exports, which were already down 2.8% year over year in Q1, saw a further 12.3% decline following the introduction of higher tariffs in March. Exports to China, a key market, recorded the steepest drop, declining by 90% in May and 78% in June compared to the previous year. While trade deal negotiations hold potential to stabilize export trends, robust domestic demand is helping to offset export market challenges. Even with beef prices reaching record highs, Americans continue to buy. Per capita beef consumption increased by approximately 4 pounds in May 2025 compared to the prior year, underscoring consumers’ willingness to absorb higher costs.

Imports further shape the landscape, as the U.S. remains a net beef importer. During the first half of this year, fresh beef imports have risen 31.7% from 2024. Brazilian beef, a key source of imports, faces tariffs which could result in a reduction of overall U.S. beef supplies. With imports playing a critical role in meeting consumer demand, monitoring trade policies and their impact will remain essential for understanding prices and market stability moving forward.

Profitability

Cattle feeders: Profitable - Bearish 12-month outlook
Cow-calf producers Profitable - Bullish 12-month outlook

Although fed cattle prices remain strong and feed costs are expected to remain affordable in the near term, returns are anticipated to tighten in the fall of 2025 as feeder cattle prices continue to climb due to limited available supplies.

Record cattle prices, driven by a shrinking herd, are fueling strong profits in 2025, while lower feed costs are expected to persist in the near term.