Last year’s USDA Cattle Inventory Report showed the smallest cattle herd in 73 years. And with no strong signs of rebuilding underway, along with strong prices providing no incentive to retain heifers, agricultural economists think the U.S. cattle inventory has shrunk even more since last year.
Last year, USDA’s Cattle Inventory report showed as of Jan. 1, 2024, the All Cattle and Calves inventory was 87.15 million head, a 2% reduction in just a year. Ahead of the 2025 report, the January Ag Economists’ Monthly Monitor asked economists to project inventory as of Jan. 1, 2025.
- 50% said they expect inventory to fall to 86 to 86.9 million head.
- 20 percent expect inventory to remain similar to levels last year
- An additional 20% think inventory will rise to 88 to 88.9 million head.
- And 10% think cattle numbers could to 85 to 85.9 million head.
What would change a producer’s minds and give them confidence to grow their herds again? That’s exactly what we asked in the latest Ag Economists’ Monthly Monitor, which is an anonymous survey of nearly 70 ag economists from across the country. While some said it will just take time, others pointed to the economics of strong cow-calf returns, weaker fed cattle prices and lower prices at the sale barn.
Other economists said:
- “Today’s high prices are certainly incentive, along with the expectation of moderate feed costs.”
- “Government policies, global demand, price cycle”
- “Better spring forage supplies could be the most important factor in growth. More quality labor could be critical, too.”
- “Confidence that the general economy outlook is positive and that there are unlikely to be negative policy shocks. And, of course, there has to be adequate forage.”
- “Improved weather pattern in the West, along with profitable margins.”
Record-High Prices
Cattle prices continued to hit records this week. And with no signs of those record prices slowing down, it’s a question of how high these prices will actually go.
Is it the supply side or the demand side driving prices? According to economists in the survey, it’s both. And that’s why out of the 10 major commodities, economists are most bullish on cattle in 2025.
Advice to Manage Risk
Even with no end in sight, the Ag Economists’ Monthly Monitor asked economists, “What advice you would offer beef producers to consider to make sure they are in the right position to take advantage of high prices now and to be prepared for when the market changes?” Here’s what they had to say:
- “Stay sold forward, and avoid over-leveraging.”
- “To just keeping looking at their genetics, retaining those with the best traits to continually improve herd quality and meat marketability.”
- “For those with adequate forage availability, the near-term outlook for cattle profitability is very positive. Remember, though, that all good things come to an end—those who wait too long may only have more animals to market when prices turn back down again.”
- “Consider all options for their risk management strategy, including both insurance products, futures, options, or other strategies.”
- “You must have something to sell.”
- “Today, there is more downside price risk for cattle prices. Risk management against a significant decline in future cattle prices should be considered today.”
- “Hedge sales and inputs both. Hedge the crush!”
