The Van Trump Report

Brace Yourself for Even Higher Beef Prices

The US cattle herd started the year as the smallest in 73 years after shrinking for the fifth year in a row in 2023. Cattle producers are expected to begin building their herds this year amid better pasture conditions and cheaper feed prices. However, this is always a slow process and will come at a time when producers are limited by a decline in replacement heifers and the smallest calf crop since 1948 to refill the supply chain. Meaning the inventory bottom of the current cattle cycle likely hasn’t been hit yet, which has some industry experts forecasting record beef prices later this year.

In its latest “Livestock, Dairy, and Poultry Outlook,” the USDA forecasts 2025 US beef production at 25.12 billion pounds, a -6% decline versus 2024. If realized, it will mark the third consecutive year of lower production and the lowest since 2015. USDA notes that the number of heifers on feed on April 1 was nearly equal to last year. The relatively strong pace of beef cow slaughter, along with relatively large placements of heifers in feedlots in 2023 and into early 2024, will likely yield a smaller year-over-year calf crop in 2025, according to USDA, in turn tightening future cattle supplies.

Notably, USDA has raised its 2024 beef production by 140 million pounds to 26.595 billion due to heavier carcass weights. The agency notes that there is typically a decline in carcass weights from the seasonal peak in November to about the end of May when they bottom. However, carcass weights have moved counter-seasonally higher from the first to the second quarter, and after declining slightly from their recent peaks are expected to remain flat into the third quarter before trending seasonally higher in the fourth quarter.

According to DTN Livestock Analyst ShayLe Stewart, steer carcass weights have averaged 919 pounds so far in 2024, “which is +18 pounds heavier than what carcasses were averaging at this point in 2023, +10 pounds heavier than the market’s five-year average, and a whopping +128 pounds heavier than what steer carcasses were averaging 24 years ago in 2000.”

Stewart also notes that Kansas feedlot data shows steers are taking an average of 190 days to finish, up 9 days from last year and 40 days more than a decade ago. Meaning feedlots are sinking far more money into their cattle, which could limit their ability to make future purchases and thus keep a lid on feeder cattle prices once supplies are rebuilt.

USDA forecasts fed steer prices in 2025 at $188.00 per hundredweight (cwt), a year-over-year increase of +3%. The 2025 forecast for feeder steers weighing 750–800 pounds at the Oklahoma City National Stockyards is $259.00 per cwt, an increase of +1 percent from 2024. Cull cow prices in 2025 are forecast at $125.00 per cwt, a year-over-year increase of +5%.

As production declines next year on the largest decline in cattle slaughter since 2013–14, USDA says it will be partially offset by record beef imports, and 8-year-low exports. March beef imports came in at 341 million pounds, topping off a record first quarter at 1.196 billion pounds. This was +25% higher than 2023 and +44% above the 5-year average. The majority of increased beef imports came from Australia, which more than doubled from last year. The import forecasts for the remaining quarters of 2024 are unchanged from last month. The 2024 annual forecast is 4.171 billion pounds. If realized, this would be a +12% increase year over year and the first time beef imports have exceeded 4 billion pounds.

Meanwhile, USDA is calling for restrained exports in 2024 and 2025 which will continue to widen the US beef trade gap (imports higher than exports). With domestic beef production expected to fall about -6% in 2025, annual exports are forecast at 2.500 billion pounds, representing an -11% decrease year over year. As a percent of production, 2025 exports would represent about 10%, versus just under 11% in 2024, and the 5-year-average of around 12%. The combination of fewer supplies available to export, higher beef prices in the United States, and increased competition from Oceania will continue to create challenges for the expansion of U.S. beef exports. (Sources: USDA, DTN, Farm Bureau)

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