The cattle market is hitting historic price highs as inventories continue to dwindle, while demand remains near record levels. The U.S. cattle herd has been shrinking for decades, with current inventory levels marking the lowest in half a century.
A combination of persistent beef demand, rising input costs for producers, and prolonged droughts spanning over key cattle population regions are all major contributors to the strong rally in cattle prices and diminishing inventory numbers. High interest rates on producers’ operating loans, alongside inflation and high input costs, are also contributing to the challenges of expanding the cattle herd, making it more unfavorable, financially, to keep replacements.
The USDA releases its annual Cattle Inventory report in January. Notably, this year’s estimated cattle and calves on feed numbers were down 1% to 14.3 million head compared to 2024 levels. Beef cow replacement heifers were also down around 1% to 4.67 million head.
Historically tight supply levels are driven by increasing culling rates of beef cows, contributing to the contraction of the U.S. cattle herd. As the cattle herd shrinks, the total number of cattle slaughtered annually also declines. To make matters worse, producers culling their females have a substantial impact on declining annual calf crop numbers, placing further strain on already-tight supplies.
Figure 1: Annual comparison of retail beef price to the U.S. cattle inventory 2001-2025.
Figure 2: Annual comparison of total cattle slaughtered to calf crop 2000-2024.
As shown in Figure 2, trends of declining cattle slaughter and calf crops certainly create a predicament around the current pace of production to meet record demand. Heavier-dressed cattle are largely responsible for offsetting the slowed slaughter pace and declining calf crop. However, the number of calves born to rebuild herds is decreasing, leading to an overall decline in total cattle slaughtered year-over-year.
Cattle sent to slaughter weigh significantly more, helping offset lowered slaughter volumes. Commercial cattle slaughter for March 2025 totaled more than 2.4 million head of cattle, down slightly less than 1% from 2024, but average live weights were about 34 pounds heavier than last year, according to the USDA.
Beef demand is inelastic, meaning that consumers will not necessarily stop buying beef products even as prices increase. This phenomenon is certainly visible in the current state of the market, in which prices have reached record highs alongside demand. Beef consumption has fluctuated over time; the USDA reported per capita consumption in 2024 at slightly over 59 lbs.—slightly higher than the reported consumption in 2023 at 57.7 lbs.
As beef prices continue to soar, there is still a degree of uncertainty on the horizon as herd liquidation continues, global trade relations remain in the balance, and markets experience significant volatility.
Live cattle prices took a dramatic upward shift in the fourth quarter of 2024 and into the new year, and continue to see a lot of volatility but remain at record-high levels. Live cattle prices have increased almost 11% from the start of the year.
As of April 29, 2025, futures peaked at $215.95 per hundredweight, marking a 30-day high. June 2025 futures also hit a 30-day high at $209.825 per hundredweight on the same day. Feeder cattle also hit record highs at the end of April, seeing a 30-day high at $294.8 per hundredweight for May 2025 futures.
The all-fresh retail beef price shown in Figure 1 hit 829.2 cents per lb. in the first quarter of the year. The five-year average is 724.8 cents per lb. While grocery prices are overall around 3% higher compared to a year ago, beef and veal prices are nearly 9% higher, according to the BLS.
With this increased demand for beef along with historically tight supplies available, beef imports have become a particular key point in the discussion surrounding beef supply. According to the USDA, beef and veal exports were down in February. The U.S. Meat Export Federation reported that February beef exports totaled 98,198 MT, valued at over $800 million. Export quantities are down 5.5% from beef exports a year ago.
It comes as no surprise that the trajectory of the cattle market will be largely dependent on supply and demand. Prices are likely to start falling if and when demand for beef falls or the cattle herd starts to expand, which would result in increased inventory levels.
Record-low inventory levels driven by drought conditions and favorable prices to sell-off replacement heifers further increase the scarcity of bred cows in the herd. More and more producers are culling heifers to slaughter rather than keeping them to expand their herd. At some point, this contraction will have effects throughout the supply chain, including processing plants that, for right now, are adapting by capitalizing on heavier-dressed cattle to offset declining headcounts. On the other hand, outlook could be heavily influenced by beef demand, which can, in turn, have a sizeable impact on prices. As consumer sentiment begins to decline to historic lows, it remains possible that beef demand may begin to decline before inventory levels begin to rebuild. Even with demand at all-time highs, uncertainty surrounding global trade and market fluctuations might change consumer purchasing patterns that could affect beef demand, placing downward pressure on prices.