While the dynamics of 2025 are very unlikely to play out the same in 2026, the year has started with positive support of cattle prices across weight classes, said Glynn Tonsor, agricultural economist at Kansas State University, in a Livestock Marketing Information Center letter called In The Cattle Markets.
Tonsor said the beef market would not have experienced observed beef and cattle price outcomes in 2024 or 2025, absent notable consumer demand strength.
There is a positive, supply-side efficiency story of getting more saleable beef per cow, Tonsor said. This reflects a host of productivity gains, but he emphasized beef demand’s role.
ANOTHER VOICE
Brian Coffey led a timely assessment posted to KSU’s AgManager.info website. He said, a look at the data readily reveals that the market changes observed in past few years are anything but one-dimensional.
“One factor that has received less attention than others is the role of consumer demand for beef,” Coffey said.
In 2023, Americans consumed 27.81 billion retail-equivalent pounds of beef, Coffey said. This number is the so-called disappearance of beef and is the most commonly used measure of aggregate consumption.
Over 2023, the average All-Fresh retail price was 759.7 cents per pound, Coffey said. The All-Fresh beef price is a composite, national average price of retail beef products in the US and is calculated by the USDA’s Economic Research Service.
To concisely examine the US retail beef market, some simplifying assumptions must be made, Coffey said.
First, he assumed the 2023 US retail beef market was in equilibrium. In other words, 27.81 billion pounds is the amount supplied to retail outlets and the amount consumers purchased from those outlets.
Second, Coffey assumed the demand and supply curves can be represented as linear functions.
Third, he assumed own-price elasticity of demand for retail beef in the US was -0.479, implying that if the offer price increases by 1%, the volume of beef purchased by consumers will decrease by 0.479%.
Fourth, Coffey assumed the own-price elasticity of supply for retail beef was 0.12, suggesting that if the offer price increases by 1%, the industry will supply 0.12% more beef at the retail level.
With those assumptions in place, a supply/demand curve can be drawn for 2023, Coffey said.
FROM 2023 TO 2024
In 2024, retail beef consumption was 28.72 billion pounds and the All-Fresh price was 801.3 cents per pound, Coffey said. Consumption and price had increased from 2023.
Between 2022 and 2023, the US beef cow herd decreased from 30 million head to 28.9 million head, Coffey said. Therefore, there were more than a million fewer beef cows to produce the 2024 calf crop than the 2023 crop.
However, more beef was supplied and consumed at the retail level in 2024 than in 2023 because: 1) cattle feeders adapted and produced heavier finished cattle and 2) imports increased slightly.
The increased supply should have resulted in a lower price of about 726.7 cents a pound if consumer demand remained unchanged, Coffey said. Yet the observed price was 801.2 cents a pound, showing strengthening consumer demand.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $240.44 per cwt to $244.31, compared with last week’s range of $240.00 to $249.00 per cwt. FOB dressed steers and heifers went for $376.98 per cwt to $382.97, compared with $382.75 to $389.66.
The USDA choice cutout Thursday was up $0.39 per cwt at $397.09 while select was up $1.57 at $390.82. The choice/select spread narrowed to $6.27 from $7.45 with 95 loads of fabricated product and 20 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $436.31 per cwt, and 50% beef was $183.65.
The USDA said basis bids for corn from feeders in the Southern Plains were $0.90 to $1.05 a bushel over the May corn contract, which settled at $4.62 1/2, up $0.02 1/4.
The CME Feeder Cattle Index for the seven days ended Wednesday was $360.97 per cwt, down $3.83. This compares with Thursday’s Mar contract settlement of $348.22, down $0.50.