Beef demand remains incredibly strong for all cuts along with ground beef and, as a result, cattle and beef prices have been remarkably resilient to larger challenges impacting the U.S. economy, including trade uncertainty, i.e., Liberation Day followed by the 90-day pause, reductions in consumer spending and, most recently, escalating conflict in the Middle East.
Demand hasn’t been the only driver of prices. The number of cattle for beef slaughter remains constrained and below year-ago levels. However, carcass weights were large enough to keep year-to-date (YTD) beef production near year-earlier levels.
The number of cattle slaughtered through the middle of June declined 4.5% versus a year ago, while beef production was only down about 1.5% compared to last year – thanks to heavier carcass weights. The very large spread between cost-of-gain in feedlots and the value of that gain when the cattle are sold to packers has continued to incentivize cattle feeders to push cattle to record weights. On a year-to-date basis, weights have outpaced year-ago levels by 3.2%, or 28 pounds per head.
The boost in weights has added 288 million pounds of carcass weight to beef production. This is the equivalent of an additional 325,000 head. Adding in trade and cold storage changes, I expect that net beef supplies grew by more than 4% during the first half of 2025.
If consumer demand were constant versus the same period of last year, I estimate that prices should have been down 8% to 12% due to the growth in supplies. Instead, choice cutout values were up 11.4% for the year (through mid-June) and five-area average fed steer prices increased 15.9% over the same period.
From January through April, beef demand, measured against the USDA all-fresh retail beef price, was up more than 7% and grew at double the pace of the same period during 2024. This is great news for both the beef and dairy industries, especially as it came during a time of growing economic uncertainty.
Consumer-level beef spending continues to far outpace pork and poultry spending. Real (inflation-adjusted) per capita consumer expenditures (RPCE) for beef during April 2025 rose 9% year-over-year (YOY) versus 2024 and were up 7.7% YTD versus a year earlier. YTD RPCE spending has averaged $35.74 per capita (deflated to 2014 dollars). Nominal per capita beef spending for January through April 2025 averaged $48.21 and was up 4.1% versus a year earlier. Beef demand has been up more than 7% on an index basis since the beginning of 2025 and was up nearly 8% during April 2025 compared to a year ago.
The story of continued weak demand for competing pork and poultry products compared to beef continues with YTD RPCE for pork and poultry down 0.3% and 0.2%, respectively. The USDA all fresh retail beef price was a record high at $8.50 per pound. during April 2025 and has posted 23 consecutive months of YOY gains.
In the current environment of strong wages and higher than anticipated job growth, taming inflationary pressures and tight beef supplies, lower prices for poultry and pork have not had much effect on beef prices or spending.
Continued strong beef demand is a critical factor for beef and cattle prices to continue the current rally.
Seasonal shifts in the number of beef cattle available for slaughter, retail grocery featuring activity, trade challenges or unanticipated economic headwinds could still lead to volatility in prices for the balance of 2025. Wholesale beef and live cattle prices are expected to retreat off the record highs as purchasing for the Independence Day holiday wraps up and the market enters the proverbial “dog days of summer.”
Nonetheless, I expect third quarter 2025 live cattle prices to settle in a nice mid-to-upper $230 per hundredweight (cwt.) range. My forecast for summer is for average feeder cattle prices to be in the range from $290 to $310 per cwt.
The good news for dairy farmers is that prices for all classes of cattle have rallied to record levels, and this should continue to work back through the supply chain all the way to dairy farms selling dairy-beef crosses and dairy culls.
