The U.S. cattle industry experienced record-high prices throughout 2024, driven primarily by strong demand for U.S. beef on a global level, CattleFax analyst Mike Murphy told attendees at the National Cattlemen’s Beef Association annual convention in San Antonio, Texas. This trend will likely continue in 2025, helped along by potentially tighter supplies as beef producers rebuild their herds and increased engagement in the cattle markets.
Murphy said beef demand relies on three main elements: exports, food service and the retail sector. In 2024, beef exports decreased in volume but increased $5 million in value from 2023 to 2024, and as Kevin Good shared in his presentation, retail demand is going strong. Food service bottomed out in July but managed to rebound by October. “That three-legged stool became more stable from a demand perspective, and that was really kind of what we saw from a price standpoint throughout the year, but certainly towards the tail end of 2024 and that's where we want to take this as we look at the price outlook in 2025.”
Leverage returning to feeders
Leverage, from a cattle feeder’s perspective, is going to be sustained, if not improved, through 2025. “We're going to be adding capacity here in the months of April and May, to the tune of about 3,900 head in terms of slaughter.” Murphy clarified that the increase is not going to be exclusively in the fed cattle sector, citing a plant near St. Louis, Missouri, set to open this spring, that will cater to both fed and non-fed cattle. “Nonetheless, we are going to see that leverage is going to funnel back into the favor of the cattle feeder sector. Really, we already have experienced that.” Murphy says it all comes down to the shackle space concept – there is more packing plant capacity than cattle available to fill them. This establishes a foundation for a robust fed cattle market. In 2024, the average fed steer price reached roughly $186 per hundredweight (cwt). In 2025, those prices will likely hit the upper $190s to $200 per cwt. “If this demand can sustain the leverage concept, somewhere here in 2025 we can open the top side of this market up and potentially push to say the mid two-teens,” Murphy said.
Murphy believes the feeder cattle market, which reflects the fed cattle market, will show high prices through 2025. Murphy estimated an average of $270 per cwt for the year. He took a look back at market trends dating from the pandemic-level lows of the spring of 2020 to early January 2025, noting the market doubled in value in that roughly four-year window. “Over time, as this feeder cow supply tightens – and potentially, if you go into an expansion phase, tightens more – we will chase the feeder cattle market to keep occupancy,” he said. “And there'll be a spot where feeders will get higher than maybe what we would be projecting just based on that concept.”
For the cow-calf sector, Murphy projected a seasonal calf market, pushing perhaps $360 to $370 per cwt this spring. Those prices will be impacted by forage availability and the summer grazing situation. Another factor that will affect calf prices is whether or not producers decide to retain heifers for next year. Cull cow prices will also be impacted by herd retention, if that is a possibility this year and, again, consumer demand for ground beef.
Long-term forecast
Considering market trends for the next few years across different market sectors (Figure 1), Murphy reiterated the importance of demand on market values. High demand for U.S. beef will drive high values in all segments of the market – from cutout prices to bred cow prices – over the course of the next few years. “Demand is the key, which drives us back to the idea that we want to continue to produce the highest-quality, most valuable, safest product in the world.”
