THE nine-week sequence of record high cash live cattle prices comes to an end. The 5-area regional trade the week before last saw steer prices average $234.88 per cwt live or $376.57 per cwt dressed. These were down $4.03 per cwt and $3.48 per cwt, respectively, from the prior week. The cash trade through last Wednesday was very light up north and inactive down south, with only 1601 head reported sold. Prices fell again, averaging $230-234 per cwt live. A somewhat larger trade occurred up north Thursday, with prices at $230 per cwt live or $365-368 per cwt dressed. Kansas reported a light trade Thursday morning at $223-225 per cwt live.
The cash cattle call last week was for prices to be lower when compared with the previous week’s trade levels, noted Andrew Gottschalk, HedgersEdge.com on Thursday. A shortened holiday schedule this coming week may limit packers’ need for significant inventory purchases. The nation will celebrate Independence Day over the July 4 weekend and most harvesting plants will not operate on Friday or Saturday, he said.
Carcass weights in the latest reported week ended June 14 declined marginally from the prior week. All weights remained well above year ago levels. Steer weights averaged 931 lbs, down 2 lbs from the week before. Heifer weights averaged 855 lbs, down 1 lb on the week before. Overall weights averaged 863 lbs, flat with the week before. This meant that steer weights declined by 13 lbs in the latest two reported weeks, while heifer weights declined by 10 lbs and overall weights declined by 9 lbs. Also of note is that cattle continue to grade a high percentage of Prime and Choice after setting a new record high of 85.35% the week ended May 10. Their combined percentage in the latest reported week ended June 14 was 84.59%.
Cutout Has Biggest Leap Of Year
The comprehensive cutout the week before last averaged $375.95 per cwt, up $8.44 per cwt from the prior week. This was the largest week-to-week increase of the year. The Choice cutout averaged $373.29 per cwt, up $6.81 per cwt, while the Select cutout averaged $362.90, up $6.38 per cwt. Formula-priced sales accounted for 54.8% of the total volume of 7354 loads. Spot market sales accounted for 23.2%, forward sales accounted for 21.9% and export sales accounted for 11.4%. Also of note that week was that the price of domestic lean manufacturing beef (90CL) averaged a new record high of $394.94 per cwt. This beat the previous record of $389.12 per cwt set the week before. Daily cutout values increased again last week. The Choice cutout the first four days increased by $4.55 per cwt to $395.05 per cwt while the Select cutout increased by $2.79 per cwt to $377.74 per cwt.
Beef demand in July seasonally weakens from its high in May and the decline might be larger than normal this year. That’s because consumer confidence in the economy worsened in June. This resumed a downward slide that had dragged consumer confidence to its lowest level since the COVID-19 pandemic five years ago. The Conference Board said that its consumer confidence index slid to 93 in June, down 5.4 points from 98.4 last month, which represented a brief uptick. The regression surprised economists, who had expected a small uptick this month. President Trump’s policies, including massive import tariffs, have clouded the outlook for the economy and the job market, raising fears that the American economy is headed toward a recession. A measure of Americans’ short-term expectations for their income, business conditions and the job market fell 4.6 points to 69. That was well below 80, the marker that can signal a recession ahead. Consumers’ assessments of the present economic situation declined by 6.4 points to 129.1, said the Conference Board.
JUNE COF HITS EIGHT-YEAR LOW
THE June 1 cattle on feed (COF) total at 11.442M head was down only 1.5% from last year but was the lowest June total since 2017. This was mainly because May placements at 1.886M head were down 7.8% from a year ago and were 3.2% below the previous five-year average. May marketings at 1.758M head were down 10.1% from a year ago and were 94.4% of last year after taking one less slaughter day this year into account. Both placements and marketings came in below analysts’ average forecasts. The marketing rate during May fell 34,000 short of the previous five-year average, says Andrew Gottschalk, HedgersEdge.com. The June 1 COF total was 141,000 head lower than a year ago. May placements were 2.7% lower than analysts’ forecasts.
Five states, Iowa (up 3%), Kansas (up 1%), Nebraska (up 3%), Oklahoma (up 2%), and Washington (up 6%), had more cattle on feed than a year ago. Texas had the most cattle on feed with 2.630M head, with its total down 210,000 head from a year ago. Nebraska was second with 2.560M head, up 80,000 head, and Kansas was third with 2.350M head, up 30,000 head. Only California (up 3%), Iowa (up 1%) and Washington (up 6%) placed more cattle in May than last year. Only Iowa (up 1%) marketed more cattle in May than last year.
Regarding placement weights, all categories except one saw lower year-on-year placements. The under 600 lb category saw 60,000 fewer cattle placed than last year (335,000 head). The 600-699 lb category saw 40,000 fewer cattle placed (275,000 head). The 700-799 lb category saw 35,000 fewer cattle placed (450,000 head). The 800-899 lb category saw 15,000 fewer cattle placed (516,000 head), the 900-999 lb category saw the same number of cattle placed (230,000 head) and the 1000 lbs plus category saw 10,000 fewer cattle placed (80,000 head).
In general, good grazing conditions accounted for the decline in May placements, says Gottschalk. Seasonally, placements should trend higher from June through October. Slower than estimated marketing rates are allowing front-end cattle (those on feed 150 days or more) supplies to remain above year ago levels. This is projected to continue through year-end unless marketings accelerate. The drop in these supplies from July to August (totaling 263,000 head) will be the result of the sharp drop in February placements, which were down 17.8% from the prior year, he says.
Front-End Supply Might Decline Less
Unless marketing rates begin to increase, the front-end supply projects to decline by only 322,000 head into December, says Gottschalk. This will be very near to the change seen in the prior year and versus a 474,000 head average decline during the previous five years. Thus, the seasonal drawdown is less than normal and may allow marketable fed cattle supplies to become increasingly front-end loaded from September through December. From August to December, cattle on feed 150 plus days project to decline by only 86,000 head. This compares with a drop of 301,000 head last year and the previous five-year average decline of 335,000 head. Carcass weights for fed steers and heifers should confirm this trend, he says.
A reduction in feedlot placements (like seen in May) adds to the available feeder cattle and calf supplies outside feedlots, says Gottschalk. As a result, the total of feeders and calves outside feedyards on June 1 is estimated to have been slightly more than 300,000 head above year ago levels. This increase may also be partly due to additional heifer retention, those kept for breeding. The total heifer harvest was down 187,000 head during the Jan-May period. For the year, heifer harvest is estimated to decline by about 425,000 head. Cow harvest is projected to decline by 872,000 head, for a drop in the total female harvest approaching 1.3M head, he says.
This year should prove to be a record high level of feedlot profitability, says Gottschalk. Thus the desire to maintain a high level of feedlot utilization remains intense. Retaining heifers for breeding purposes is likely to gain favor throughout the rest of the year. A hazard to this action would be widespread drought conditions developing in cow-calf country, which would result in more heifers going into feedyards. His annual average price estimate for 750-800 lb feeder steers is $287 per cwt.
ARE THERE SIGNS OF HERD GROWTH?
THIS is the question that reverberates around the U.S. beef industry almost every week. Market analyst Derrell Peel of Oklahoma State University is one of those looking for signs. The January 1, 2025 beef cow inventory was 27.86M head, down 0.5% from the previous year, he says. Was 2025 the smallest cow herd inventory for the current cattle cycle? It is looking more likely that it might be the low, he says.
Herd growth this year depends on the amount of cow culling relative to the supply of bred heifers that will enter the herd during the year, says Peel. Although the inventory of bred heifers was record low, beef cow slaughter was down 16.2% year-on-year for the first 21 weeks of the year. This indicated a low level of cow culling that might allow for a fractional increase in the beef cow herd this year. Where would beef cow herd growth be most likely if it is beginning? January data showed that seven of the top ten beef cow states had beef cow inventories that were unchanged or were up slightly from the prior year. Missouri had 2% more beef cows while Texas, Oklahoma, Montana and North Dakota were up 1% year-over-year. Kansas and Florida had the same number of beef cows as the year prior, he says.
Moreover, while the total beef replacement heifer inventory was down 1% year-over-year, several states had heifer inventories that were up, says Peel. They included Kansas, up 3%, and Oklahoma and South Dakota, up 2%, from the previous year. Montana, Missouri, North Dakota, Wyoming and Florida had beef replacement heifer inventories unchanged from the prior year. It would appear that a number of major beef cow states are interested in herd rebuilding. However, forage conditions continue to be a limiting factor in some regions. The latest Drought Monitor shows that the central and northern Plains and much of the Rocky Mountain region are still struggling with drought, says Peel.
Another perspective come from Wesley Batista Filho, CEO of JBS SA’s North American business. U.S. ranchers are moving to expand their herds from a seven-decade low, paving the way for a long-awaited recovery in beef supplies, he says. We are into herd rebuild right now. The economic incentives are there, the weather is helping. The move is backed up by a recent reduction in the number of female cows being sent to slaughter, which indicates more of them are being held for procreation, he says. Still, it will take years for cattle supplies to recover, with no meaningful increase expected before 2027. It’s not ever going to be like taking the elevator. It will be more like taking the stairs, he says. JBS meanwhile offered $3.5 billion in bonds up to 2066, the largest and longest in the company’s history. The net proceeds from the offering will be used in various financial ways, including paying down short-term debt. Any remaining funds would be used by JBS for general corporate purposes, it says.
MEAT REMAINS KING OF THE CASE
MEAT remained the king of the retail meat case in May, despite lingering inflation, as pounds purchased grew 3.2% year-over- year, despite lingering inflation. Beef and chicken played major roles in that growth, according to the latest research from Chicago-based marketing firm Circana. The meat department had another monster month, says Anne-Marie Roerink of the consulting firm 210 Analytics. Boosted by inflation, overall retail dollar sales increased 6.1% and 8.6% for fresh meat, she says (as reported by Supermarket News).
In terms of volume, total meat sales rose 2% year-over-year in May, says Roerink. Fresh lamb continued to be a standout performer, up 15.5% from last year. Over the past 52 weeks, pounds sold increased 11.5%. Fresh beef saw a 4.7% year-over-year gain in May. Among processed meats, smoked ham led in pounds sold with an 11.6% increase. People in May made more trips to the grocery store but put less in their baskets, according to Circana. Year to date, consumers have already shopped for groceries an average of 62 times per household, up 4.3% from the same period in 2024. However, the average ticket size is shrinking. Circana data showed that items purchased per trip are down 2.3% year-over-year. In some categories such as meat, volume increased faster than units sold, indicating a shift to larger pack sizes. In other cases, consumers balanced their grocery spending by buying fewer items and/or choosing smaller pack sizes.
CBW OUTLINES SUPPLY AND DEMAND FACTORS
CATTLE Buyers Weeklyregularly reports on key supply and demand factors that face the U.S. beef industry. Editor & Publisher outlined the latest fundamentals in a recent private presentation to a long-time subscriber. He noted that the U.S. cattle population is the smallest since 1951. The January 1 2025 herd total of 86.662M head was down 0.6% from 87.175M head. But the big difference between 1951 and 2024 is that 1951 produced 8.1 billion lbs of beef, versus 27.0 billion lbs last year.
2024 was the sixth year of herd liquidation, with a decline of more than 8M head, noted Kay. But the Cattle on Feed total has this year remained close to last year each month. The June 1 total was 11.442M head, 98.8% of a year earlier. Slower than estimated feedlot marketings will keep the front-end supply above a year ago into December. Feedlots are holding cattle longer, hence record high carcass weights for this time of year. That’s the main reason why weekly slaughter rates have been mostly below 600,000 head this year. Only three weeks out of 25 weeks have been above 600,000 head. Packers are operating their plants only five days per week.
New World screwworm impact is potentially significant, noted Kay. A new ban on May 11 ban on the importation of Mexican cattle could boost live cattle prices in the summer when they normally decline. The new ban began after reports that the disease was spreading north from southern Mexico. Well over 1M Mexican feeder cattle entered the U.S in 2024, with most going to Southern Plains feedlots.
The downturn in the herd size has been due to lingering drought, high input costs (including the cost of borrowing to finance heifer retention), the increasing age of cattle ranchers and their increased aversion to risk. Some modest beef herd rebuilding might show up this year because of record high live cattle and feeder cattle prices. But ranchers will remain wary of expanding too quickly and will need to see ample green grass.
Strong Demand Is Main Story
Strong demand at home and abroad for U.S. beef is the main story so far this year, noted Kay. The domestic market takes 87% of all U.S. beef production. Retail beef prices were record high in April. Choice beef averaged $8.83 per lb, up 8.3% on last year. The All Fresh beef price averaged $8.50 per lb, up 6.9%. U.S. beef exports January through April were 3% below last year’s pace at 411,027 mt. Export value was down just 1% to $3.35 billion. This meant improved demand in value terms in overseas markets.
U.S. beef still faces a 32% tariff in China, noted Kay. But the bigger impediment is that China still has not renewed the expired U.S. beef facilities. This means the vast majority of U.S. beef is ineligible to ship to China, which has been the case since mid-March. The U.S. Meat Export Federation estimates that the beef industry could experience a $4.13 billion full-year impact if access to China is lost. But there has been no impact so far on U.S. cattle producers or beef demand.
Packers say they are finding new homes for beef that would have gone to China, noted Kay. For example, more short plates are now going to South Korea. Meanwhile, USMEF continues to diversify and grow markets for U.S. beef, from central and south America to Asian nations such as Vietnam and the Philippines. Brazil and Australia are the only major beef-producing countries where herd size and production is growing.
Regarding beef consumption, the figure averaged 59.1 lbs per person in 2024 and will average, 59.2 lbs in 2025, noted Kay. It won’t increase above these levels unless U.S. beef production and beef imports both increase significantly. Kay also noted that the U.S. population increases each year. Record high retail beef prices this year have had no impact on consumption in terms of volume sold. More cattle on feed might help per capita consumption increase but the key would be a lot more imported beef going into the hamburger trade, he noted.