A Few Thoughts by John Nalivka: U.S. consumer demand for beef remains strong
The current conversation centers on tariffs or the possibility of tariffs and how they might impact U.S. agriculture and / or U.S. consumers. I do not intend to get into that conversation as I am not sure if there are any solid assumptions to generate a robust economic assessment that is not misleading. Instead, there is another topic that deserves as much attention and that is demand.
Over the last year, I have indicated that we all have a fair assessment of cattle numbers going forward and this year’s USDA January 1 inventory survey was in line with my cattle inventory forecast and supportive to my opinion of herd building – limited – albeit my forecast was lower than USDA’s reported number. From the feedlot perspective, estimated feeder cattle supplies outside of feedlots on January 1 were down ½% from year earlier and the lowest number in my estimates which are back to 2000.
Commercial cattle slaughter for all of 2024 was down 3% from a year earlier but, while reduced cattle numbers will support the record prices that we have experienced, the other side of the equation is demand. In addition, I have only referenced cattle numbers, and while the industry slaughters and processes cattle, they sell beef. In contrast to cattle slaughter, commercial beef production during 2024 was even with 2023.
Though the market has softened seasonally into early February, market performance was robust during January with both wholesale beef prices and cattle prices across the board pushed to record highs. USDA’s composite cutout value representing the overall market value for Prime, Choice, Select, Branded, and Ungraded beef has averaged $3.27/lb. since the beginning of 2025 which is 14% higher than for the same weeks of 2024 and 20% higher than 2023. The first five weeks of 2024 averaged 5% higher than 2023.
Choice steer prices for the five weeks of 2025 averaged $2.05/lb. posted a 17% increase over the same period in 2024 and a 30% increase over 2023.
Market performance is rewarding demand. This is positive and it is attributable to the significant improvement in beef quality and consistency. Americans have taken a new liking to beef. However, with the prospects for tight cattle numbers over the next 2 to 3 years, the importance of consumer demand will be critical.