Economists expect the nation’s cattle herd to either stay steady or continue shrinking into 2025 as producers show caution about restocking amid high production costs and drought potential.
Steer prices, already high, will likely remain that way amid tight inventories. Cow-calf producers are reaping the benefits of high prices, but stockers and backgrounders are seeing tighter margins as they spend more upfront for cattle, in hopes that good weather and limited feed and labor costs will allow them to make a profit later in the year.
Live slaughter steers were selling at an average of $203 per hundredweight on Jan. 9, according to USDA data. The agency estimated last week that prices for 2025 will average $195.50 per hundredweight, which would be a 4% increase over 2024.
“These cattle are bringing dollar amounts that we’ve never seen before and that’s an exciting time to be in the cattle business,” said Justin Tupper, a South Dakota cattle producer and the president of the U.S. Cattlemen’s Association. "It’s also a little bit of a scary time. As you get to the point of the spear, you wonder when the market will tip back. We always know it’s going to, it’s just a matter of when and how far.”
Justin TupperThe number of cattle and calves on feed for the U.S. slaughter market was at 11.98 million head on Jan. 1, a 1% decrease from the same date last year, according to USDA's Cattle on Feed report. Feedlot placements were 1.64 million head that day, 3% off from the same date last year.
Information on the current size of the beef herd will be published Friday, when USDA’s biannual cattle inventory report comes out. Kansas State University economist Glynn Tonsor says the numbers likely will show herd expansion has not begun. In fact, he believes the beef herd has shrunk slightly as producers contend with high production costs and confront possible drought.
“Things are good, but maybe not as good as they were in 2014,” Tonsor said, referring to the last major upturn in the cattle cycle. “Most producers would tell you that the list of things they’re uncertain about has grown since 2014, whether that’s their hay inventories or weather.”
Tonsor sees 2025 as a “neutral year” but thinks major inventory growth won’t occur until 2026. “We won’t decline more, but we won’t really grow, either,” he said. "We’ll just stop the decline.”
A smaller overall herd doesn’t necessarily translate into a major decline in beef supplies, Tonsor said. He noted that multiple decades of breeding have allowed for "more pounds of beef out of every mama cow in the system.”
Tupper said he’s seen many of the cattle that normally would sell between February and April being sold in January, which he said is a tell-tale sign of retraction. He said producers in his region have signaled keeping herd sizes steady as opposed to holding back extra cattle.
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“If we’re going to expand these numbers and get back to our cow herd numbers, there’ll have to be quite a few more kept and I don’t know if we’re there yet,” he said.
Oklahoma State University economist Derrell Peel said consumer demand for beef remains strong despite the high prices. “If consumers wanted to go away from expensive beef, there’s plenty of pork and poultry around,” he said. “Yet, the demand for beef continues."
Glynn Tonsor"We’re in a period of high prices that’s going to be around for a while," Peel said. "I don’t know where the actual peak will be, probably not in 2025, it’s probably after that because it’s going to take several years if we start trying to rebuild.”
Restrictions on Mexican cattle imports due to screwworm are among the variables that have contributed to currently high beef prices. USDA’s Animal and Plant Health Inspection Service halted Mexican cattle imports to the U.S. due to the pest on Nov. 22, and these restrictions have not yet been lifted.
Tonsor said Mexican cattle typically only make up between 3% and 4% of the total number of cattle slaughtered in the U.S. annually, which limits the overall impact of the ban. Still, it is helping drive up cattle prices to some degree for feedlot operators in Texas, New Mexico and Oklahoma who would normally have access to Mexican cattle, said Josh Winegarner, director of government relations for the Texas Cattle Feeders Association.
"Everybody’s watching and very attentive to this because they know that it is affecting the overall price and will impact their break-evens,” Winegarner said.
Winegarner is hoping that Mexican cattle imports resume within the next few weeks. Mexico has prepared memorandums to allow for crossings to resume with more inspection measures but USDA has not signed off, possibly due to the ongoing transition at the agency.
“It’s just, I think, getting people where they need to be to go ahead and sign off on it,” he said, though he added that Texas cattle feeders do have some concerns that the APHIS measure “could be caught up in the regulatory freeze that the Trump administration has initiated, so we’re working to make sure that all parties understand that.”
Once Mexican cattle shipping resumes, Winegarner said they may take longer to get across the border, due to additional inspection measures.
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