Cattle markets have rewarded producers over the last several years with historically strong prices. For many cow-calf and stocker operations, that has translated into significant equity built into today’s cattle inventories. But as prices rise, so does the amount of risk tied to every hundredweight.

Risk in the cattle market doesn’t suddenly appear in the cash market. It can surface quietly – first on the board, in how futures are priced, how options reflect uncertainty and how basis behaves compared to those markets.

Strong beef demand will likely continue in 2025, helped along by potentially tighter supplies as beef producers rebuild their herds and increased engagement in the cattle markets.

Despite anticipating record-high calf values, the beef industry will start feeling the pinch of tight fed cattle supplies coming in the next year, Kevin Good, vice president of market analysis at CattleFax, told attendees at the 2024 CattleFax Industry Outlook Seminar, held on Feb. 2.

As cattle producers – beef or dairy – it is critical to remember that both our industries have the same end product: beef. This concept that all cattle contribute to beef production has never been more closely aligned than with the current growth in the mating of dairy cows to beef semen.

Over the next few years as the cattle herd builds back, cull cow prices and all beef prices will rise as the U.S. cycles into tighter supplies, giving more market leverage to the producer.