SAN ANTONIO, TEXAS – During the recent CattleCon 2025, the CattleFax Outlook Seminar was held, where experts detailed market and weather analysis for the upcoming year.

Early markers indicate the US beef industry appears ready for a strong market performance driven by tight cattle supplies and continued consumer demand.

The seminar noted the beef cowherd will enter a stabilization phase following years of contraction, the resulting supply constraints shifting market leverage decisively in favor of cattle producers.

Another noteworthy area covered in the seminar was the impact of weather conditions on grazing availability, herd expansion and cattle prices during 2025.

Meteorologist Matt Makens noted a La Niña this winter brings somewhat volatile weather changes across North America with the majority of weather extremes affecting those in the Central to Eastern United States. For Mexico and the Southwestern United States, producers will see drought acreage increase as it has nationwide since June.

“Drought will likely increase across the Western US this spring and into the Pacific Northwest, Northern Plains, and Canadian Prairies through this summer,” Makens said. “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. Current data show the monsoon will likely 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.”

Another area touched on was the economic outlook, energy, and feed grains by Troy Bockelmann, director of protein and grain analysis at CattleFax. He explained inflation eased in 2024 by ending the year at 2.9%, which was a drop from 9% in 2022. However, it was still above the Federal Reserve’s 2% target. During the second part of 2024 the Fed decided to cut interest rates three times, which brought the Prime bank loan rate to 7.5%

Labor numbers showed that unemployment rose briefly midyear and then fell to 4.1% as job creation outpaced expectations. Projections from Bockelmann and economists expect the US economy to see 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.”

Addressing a different sector, CattleFax reported average crude oil prices are expected to be near the position of 2024. However, the risk remains for a reduced US market share of global products with trade policy decisions. Bockelmann also expects ethanol production to continue to stay strong.

Kevin Good, vice president of market analysis at CattleFax, reported that the US beef cow herd is expected to see a low cycle starting in 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,” he said. “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. 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.”

On the price side beef stayed upward in 2024 at an average price of $8.01/lb., the second-highest demand level in history. Retail prices are expected to rise to an average of $8.25/lb., while demand may ease slightly in 2025, according to Good. 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,” Good said. “While opportunities for further leverage gains are limited, the market remains favorable for producers.”

With moderate inflation in 2024 but high consumer debt, elevated interest rates and competition from more affordable protein options could impact purchasing decisions on certain beef products. However, the CattleFax numbers show foodservice resilience that ended 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.”

Good noted on the global protein section that projections show US beef exports will decline by 5% in 2025 with reduced production and higher prices. In contrast, US beef imports are expected to grow with tightening lean beef supplies.

“The global outlook is currently an interesting scenario as trade policy developments, including potential tariffs, could pose risks to international markets,” Good said. “While growth is expected this year, it may be limited to global competition supply constraints and an uncertain tariff environment.”

In another part of the session, 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 continue to trend upward. The 800-lb. steer price is projected to average $270/cwt., and the 550-lb. steer price is expected to average $340/cwt. Utility cows project 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,” Murphy said. “Producers are encouraged to adopt risk management strategies and closely monitor developments in trade policy, drought conditions, and consumer demand.”

To finish the session, Randy Blach, chief executive officer of CattleFax, detailed the strong margins for the cow-calf sector and laid out the cowherd expansion, beginning with heifer retention likely returning to a near-normal pace compared to minimal retention in recent years.

Blach highlighted drought and pasture conditions as key factors for expansion rate with a slower herd rebuild anticipated compared to a previous cycle. A measured expansion pace implies a positive outlook for producer returns over the next several years. Like other presenters he pointed to strong consumer demand as a bright spot for the industry.

“We have to remember where we came from,” Blach said. “Continued improvements in quality and meeting consumer expectations with a safe, nutritious product and a consistently good eating experience have had tremendous impacts on moving the needle for this industry. We’re moving in the right direction, and we need to keep paying attention to that signal.”