Beef producers are well into one of the most dangerous times as sellers in a commodity market – that time where it seems like things have changed forever in your favor. And why wouldn’t you start feeling that way? Since 2020, the price you get for live cattle has more than tripled from a low of 77.428 in April of 2020 to a record? The high hit 233.75 as of July 30 of this year (see chart below). Furthermore, this new high far outpaces the previous high of 174.053 in November of 2014, and who’s to say how much higher prices could rise in the current bull market?

 

 

 

 

Without question, these are great times for a beef producer. However, let’s get back to why this situation is potentially dangerous for you. If you start believing prices will only rise, this also means you are starting to believe that every sale should be made as late as possible to get the highest price. You’re likely also starting to believe that managing the risk of falling prices in the face of ever-increasing prices only has the potential to harm your bottom line. If this describes your thinking, you are also one of the many with the potential to be whipsawed financially if any of the underlying conditions supporting current prices changes. With that in mind, let’s take a closer look at the fundamentals – starting with supply and then demand – to help you understand the risks you potentially face.

 

 

Supply Remains Incredibly Tight

 

Over the past decade or so, live cattle producers have become experts in managing input costs and optimizing the number of animals they can raise in very difficult environments. Per the Farm Bureau, you have been managing against the following factors:

 

• Persistent drought conditions have led to less pasture and low-quality feed, forcing producers to sell or cut back on animals.
• Producers have been selling female calves to feedlots to garner high prices rather than keeping them as replacements for the herd.

 

The conditions contributing to the decrease in herd size are not only because of increased input costs, as the Farm Bureau explains. Because live cattle prices are so high, it is much more profitable to cull cattle vs. holding onto older livestock or to build the herd. The end result is a huge contraction in supply as cattle numbers dropped to their lowest levels since 1951 (as of the article’s date of 2/5/2024). According to the USDA Cattle report released January 31, 2025, U.S. producers had a combined herd size of only 87.2 million head on Jan 1, 2024, and fell an additional 1% to 86.7 million on Jan 1, 2025. On another good note in your favor, supply has also tightened as cold storage beef in freezers was down 3% from April 2025 to May 2025, and 1% compared to May 2024.

 

However – and there’s always a however – high prices always invite new entrants and increased supply to capture those high prices. In spite of a temporary ban on beef from Mexico due to New World Screwworm, the USDA expects imports to increase in the second half of 2025, and higher feedlot placements are expected in the second half of 2025. Accordingly, U.S. cattle inventory is expected to bottom out this year and then continue to grow into 2033 (see below) with prices expected to fall accordingly. This is a potential warning to producers that a change in prices may be on the horizon.

 

 

 

 

Let’s Talk Demand: Americans Continue to Love Their Beef

 

Second only to chicken, Americans choose beef as a top protein choice, well ahead of pork, fish, and meat alternatives (see the chart below provided by the NCBA on behalf of Beef Checkoff). Even better, that love of beef appears rather recession-proof. In 2024, the University of Georgia studied U.S. consumer behavior with regards to beef, and it concluded that in 2024, the average U.S. consumer consumed the most amount of beef per person since 2009 in spite of higher costs. Importantly, the study points out that the demand for beef may be tested if supplies continue to tighten as costs rise.

 

 

 

 

Additionally, U.S. consumers aren’t the only game in town. Another factor to keep an eye on is export demand.  The latest WASDE report projects that exports are expected to slow down from 3,007 million pounds in 2024 to 2,728 million pounds in 2025, and even more in 2026 down to 2,565. This is due to increased cost due to low supply numbers and tariffs along with high U.S. demand.

 

 

Taking Control of Your Weighted Average Price

 

As a producer, you need to be concerned with both U.S. and non-U.S. demand and its potential huge negative impact on razor-thin margins:

 

• Regardless of whether or not prices continue to show strength, changes to any factors supporting that price, such as the number of cattle or slowdowns in demand, could drastically and quickly affect price. With the high cost of production, it is important to look at different options to protect your bottom line and any potential income you may be making at these price levels.
• As we continue into the fifth consecutive year of a bull cattle market, some may start to turn a blind eye to marketing, believing there is no end to this run in the cattle markets. However, the minute you start believing this is the moment you leave you and your operation at risk. One large event (or even small event) can cause the market to switch directions very quickly.

 

Protect yourself, your operation, and those who depend on you from a market that is bound to change when you least expect it. At Total Farm Marketing, we have helped producers like you manage their risk and prepare their operation for whatever may happen. Look to us as the partner you want in any market environment – consistent, focused on you and your operation, and dedicated to your marketing success.

 

 

 

This year, Total Farm Marketing is celebrating our 40th year helping farmers.

Give us a call at 800.334.9779 to discuss your situation and how we can help you in your marketing decisions.

 

 

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