Writing for the Livestock Marketing Information Center’s In The Cattle Markets, Glynn Tonsor, Extension agricultural economist at Kansas State University, said he expected the January Cattle (Inventory) report to show additional liquidation has occurred leading to a smaller calf crop in 2025.
“It seems most likely that the summer of 2026 is the soonest substantial national heifer retention may begin,” Tonsor said.
While there is elevated uncertainty around international trade that should not be overlooked, many market analysts indicate they anticipate domestic beef availability to decline perhaps by 2-3% per year (per person) in 2025 and 2026, he said.
A HISTORICAL REMINDER
Economists analyzing the beef industry use the term “demand” to refer to the willingness and ability to buy beef at a specific price, Tonsor said.
A change in beef demand is not triggered by changes in beef prices but by consumer income or wealth adjustments, changes in prices of other goods or perceptions of beef quality evolving, he said. The clear improvement in overall beef quality has been core to beef demand growth.
In 2025, Tonsor said, it is important to pause and connect the dots around things like current feedlot supplies, future breeding herd size and corresponding beef availability, and what one may expect at the retail and food service level.
Lower beef supplies are expected and with that, most analysts anticipated higher end-user beef prices, he said. In fact, the industry should be hoping for this! Research showed that feeder cattle sellers stand to gain the most when beef demand grows, and lose the most when demand falters.
If lower beef availability is observed in conjunction with flat or lower beef prices, then beef demand clearly declined, Tonsor said. In this situation, economic viability for most in the industry also declines.
While some younger market participants may dismiss this scenario, recall the 1980s & 90s was a period largely characterized by a shrinking herd, weakening beef demand and overall decline in industry vitality, he said. Indeed, lower beef volumes alone do not guarantee higher beef nor cattle prices.
That experience is worth periodic reflection as the industry has made massive improvements that should not be overlooked or taken for granted, Tonsor said. To the extent that beef prices increase reflecting stable or growing beef demand that is a market outcome that should not only “be allowed” but encouraged.
While the term “demand destruction” is likely to appear more in coming months, industry stakeholders are encouraged to take pause and hope that higher prices develop reflecting stable or growing beef demand.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers last week ranged from $191.00 per cwt to $195.22, compared with the previous week’s range of $191.52 to $194.79 per cwt. FOB dressed steers, and heifers went for $300.56 per cwt to $307.99, compared with $299.65 to $307.99.
The USDA choice cutout Friday was up $1.99 per cwt at $322.38 while select was up $2.36 at $291.13. The choice/select spread narrowed to $31.25 from $31.62 with 68 loads of fabricated product and 19 loads of trimmings and grinds sold into the spot market.
The USDA-listed weighted average wholesale price for fresh 90% lean beef was $323.82 per cwt, and 50% beef was $83.58.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.19 to $1.35 a bushel over the Mar corn contract, which settled at $4.54, up $0.00 1/4.
No delivery intentions were posted for the Dec live cattle contract Friday.
The CME Feeder Cattle Index for the seven days ended Thursday was $258.32 per cwt, down $2.45. This compares with Thursday’s Jan contract settlement of $261.37, up $2.07.