Lancast Ag Podcast: State of the Cattle Industry

The latest episode of the Lancast Ag Podcast featured an insightful discussion on the current cattle market, herd rebuilding, and trends shaping the industry in 2025. Hosted by Lane Nordland at CattleCon 25, the episode included an in-depth conversation with Don Close, Senior Animal Protein Analyst at Terrain. Here’s a breakdown of the key takeaways from their discussion.

Cattle Inventory Report: A Tight Supply Market

The January 1 cattle inventory report showed a 1% decline from the previous year, with a total of 86.7 million head. While this drop was expected, the market’s reaction was relatively subdued. However, Don Close emphasized that the report holds significant long-term implications, as the current supply remains tight while demand continues to be strong.

Comparing today’s numbers to 2014, the total inventory is now lower, yet there are 1.5 million more cattle on feed. Additionally, available cattle outside of feed yards has decreased by half a million head compared to last year. This suggests that while supply remains tight, beef availability should hold steady for the first half of 2025. However, by the third and fourth quarters, we could see a much tighter supply of fed beef.

Herd Rebuilding Challenges

Despite historically high prices, widespread herd rebuilding has yet to occur. Factors such as drought conditions, financial recovery from recent downturns, and the aging producer demographic have slowed expansion. Some regions, including parts of Canada and Montana, have seen slight inventory increases, but overall, most producers remain hesitant.

Another key issue is cow longevity. Many of the high-quality cows retained from the 2014 expansion are now aging, which means herd attrition is likely to accelerate in the coming years. This will put additional pressure on producers to retain heifers and make replacement decisions.

Market Trends and the Role of Dairy Cattle

The discussion also touched on dairy cattle’s increasing role in beef production. With two new cheese plants set to open in Kansas and Texas, dairy herd expansion may occur faster than beef herd expansion. Additionally, dairy calf prices are strong, which could incentivize growth in the dairy sector before beef producers feel comfortable expanding their herds.

The Impact of Mexican Feeder Cattle Import Ban

Another factor influencing the market is the recent import ban on Mexican feeder cattle due to concerns over screw worm. Since the ban took effect in November 2024, Texas Cattle Feeders Association (TCFA) placements have declined by 23%, showing the significant role Mexican imports play in U.S. cattle supply. Even if the border reopens soon, Mexico’s cattle inventory may not have enough supply to make up for the shortfall.

Economic Factors: Interest Rates and Input Costs

Producers looking to rebuild their herds must also consider economic pressures. High interest rates, inflation, and input costs make expansion a risky proposition. Close advised producers to carefully weigh their options, noting that purchasing mature cows might be a lower-risk investment than retaining heifers due to the high costs associated with developing young females.

Beef Demand Remains Strong

Despite economic uncertainties, beef demand continues to be robust. Consumers are still willing to pay premium prices, with demand for prime and high-choice cuts remaining solid. Additionally, ground beef sales remain strong, further supporting the market.

Avian Influenza and Protein Markets

Concerns over avian influenza remain a significant factor in protein markets. The outbreak has affected poultry production across all 50 states, leading to increased chicken and egg prices. While poultry production cycles are shorter and can recover faster than cattle production, ongoing issues could indirectly support beef demand.

Looking Ahead: Key Considerations for Producers

For cow-calf producers, market conditions remain favorable, but challenges persist. Close advised that while the market still has room to grow, expansion decisions should be made carefully. He anticipates that the industry may not see substantial herd growth until 2027.

His final piece of advice to producers: Take time to enjoy the strong market conditions while they last, as these cycles don’t come around often.

Upcoming Sale: Sandhill Red Angus Production Sale

For those looking to invest in quality genetics, Sandhill Red Angus will be hosting its annual production sale on March 4, 2025, at Sydney Livestock Auction in Montana. The sale will feature 90 Red Angus bulls, 75 bred heifers, and 75 first-calf pairs. These females are sorted for a one-cycle breeding period and will be available for mid-April to early May delivery.

Final Thoughts

The cattle market remains strong, but many uncertainties still lie ahead. Tight supplies, economic pressures, and environmental conditions will all play a role in shaping the industry in the coming years. Producers should stay informed, carefully assess expansion opportunities, and take advantage of the favorable prices while they last.