The popular CattleFax Outlook Seminar, held as part of CattleCon 2025 in San Antonio, Texas, shared expert market and weather analysis today.
The U.S. beef industry is poised for another year of strong market performance, driven by tight cattle supplies and robust consumer demand. As the beef cowherd enters a stabilization phase following years of contraction, the resulting supply constraints have shifted market leverage decisively in favor of cattle producers.
Weather conditions will remain a critical factor influencing grazing availability, herd expansion and cattle prices. Meteorologist Matt Makens said La Niña this winter brings rather volatile weather changes across North America with the majority of weather extremes affecting those in the Central to Eastern U.S. For Mexico and the Southwestern U.S., producers will see drought acreage increase as it has nationwide since June.
“Drought will likely increase across the Western U.S. this spring and into the Pacific Northwest, Northern Plains, and Canadian Prairies through this summer. To watch will be the North American monsoon and how much drought relief it can provide to Mexico, the Southwest, and parts of the Plains,” he said. “Current data show the monsoon is likely to produce more moisture this year than last. A strong enough monsoon can decrease precipitation across the central Corn Belt, watch July closely. Late in the year, the focus turns to the development of La Niña or El Niño.”
Shifting the discussion to an outlook on the economy, energy and feed grains, Troy Bockelmann, CattleFax director of protein and grain analysis, noted that inflation eased in 2024, ending the year at 2.9%, a significant drop from the 9% peak in 2022 but still above the Federal Reserve’s 2% target. To address this, the Fed cut interest rates three times in the latter half of the year, bringing the Prime bank loan rate to 7.5%.
The labor market remained strong, with unemployment briefly rising midyear before falling to 4.1% as job creation outpaced expectations. Combined with solid consumer spending and wage growth, the U.S. economy is expected to see healthy GDP growth of 2 to 2.5% in 2025.
“The Federal Reserve’s rate cuts helped stabilize inflation and support economic growth, but we’re still above target,” Bockelmann said. “Despite economic headwinds, consumer confidence and spending have remained resilient. However, lingering inflation and potential trade uncertainties may limit the extent of further interest rate cuts this year and inflation remains a key factor to watch in 2025.”
CattleFax shared that National Dec. 1 on-farm hay stocks were up 6.3% from a year-ago at 81.5 million tons with hay prices averaging $175/ton in 2024. Corn stocks-to-use at just over 10% and should support the spot market towards $5.00/bu. with a yearly average spot future price of $4.40/bu. expected.
“An increase in corn supply for the new crop year is expected as smaller beginning stocks are offset by larger production levels due to corn regaining acres from soybeans. Stocks-to-use have the potential to be above 13 percent which implies a price range of $3.75 to $5.15/bu. for the 2025 market year,” Bockelmann said. “There is a strong correlation between corn stocks-to-use and hay, and we expect hay prices to follow corn and trend a bit higher in the coming year.
On the energy front, he noted, for 2025, not much will change. Average crude oil prices are expected to be near steady with 2024 though risk remains for a reduced U.S. market share of global product due to potential trade policy impacts. He also expects ethanol production to continue to stay strong.
Kevin Good, vice president of market analysis at CattleFax, reported that U.S. beef cow herd is expected to see the cycle low to start 2025 at 28 million head, 150,000 head below last year and 3.5 million head from the 2019 cycle highs.
“We expect cow and bull slaughter to continue declining in 2025, with overall numbers down by about 300,000 head to 5.9 million head total. Feeder cattle and calf supplies outside of feedyards will also shrink by roughly 150,000 head, while cattle on feed inventories are starting the year slightly below 2024 levels at 11.9 million head,” he said. “With a tighter feeder cattle supply, placement pace will be more constrained, leading to a projected 700,000-head drop in commercial fed slaughter to 24.9 million. After modest growth in 2024, beef production is expected to decline by about 600 million pounds to 26.3 billion in 2025, ultimately reducing net beef supply per person by 0.8 pounds.”
Beef prices continued their upward trend in 2024, averaging $8.01/lb., the second-highest demand level in history. While demand may ease slightly in 2025, retail prices are still expected to rise to an average of $8.25/lb. Wholesale prices will follow suit, with the cutout price projected to reach $320/cwt
“Retail and wholesale margins are historically thin, making strong consumer demand essential to maintaining higher price levels,” said Good. “While opportunities for further leverage gains are limited, the market remains favorable for producers.”
Inflation remained moderate in 2024, but high consumer debt, elevated interest rates, and competition from more affordable protein options could impact purchasing decisions. However, foodservice demand showed resilience, ending the year stronger as same-store sales and customer traffic improved.
“Despite economic pressures, consumers continue to pay premiums for higher-quality beef,” Good added. “Choice grade or better remains in high demand, reinforcing the strength of the premium beef market.”
Turning to global protein demand, Good noted that the outlook for animal proteins remains strong, although U.S. beef exports are projected to decline by 5% in 2025 due to reduced production and higher prices. Conversely, U.S. beef imports are expected to grow as lean beef supplies tighten.
“The global outlook is currently an interesting scenario as trade policy developments, including potential tariffs, could pose risks to international markets. While growth is expected this year, it may be limited to global competition supply constraints and an uncertain tariff environment,” Good said.
Mike Murphy, CattleFax chief operating officer, forecasted the average 2025 fed steer price at $198/cwt., up $12/cwt. from 2024. All cattle classes are expected to trade higher, and prices are expected to continue to trend upward. The 800-lb. steer price is expected to average $270/cwt., and the 550-lb. steer price is expected to average $340/cwt. Utility cows are expected to average $140-/cwt., with bred cows at an average of $3,200/cwt.
“While the cyclical upswing in cattle prices is expected to persist, the industry must prepare for market volatility and potential risks. Producers are encouraged to adopt risk management strategies and closely monitor developments in trade policy, drought conditions, and consumer demand,” Murphy said.
2025 USDA All-Fresh Retail Beef prices are expected to average $8.25/pound and, which will continue the balancing act for retail between high prices and reduced supply. Murphy noted that the key is to avoid setting prices too high, especially in light of competition from more affordable proteins.
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