Uncertainty is the word for 2025 says Glynn Tonor, K-State livestock economist.
“We are in middle of July, and I was hoping I’d be using that word less, but I think it still applies a lot,” he says on Agriculture Today.
The Agricultural Marketing Service reported the fed cattle market at $235 on July 12, which is still up $25 from a few months ago, Tonsor points out. Volume is lower this time of year, which is not uncommon. He references a couple different lots, including 55 head at $318 and a heavier lot of 924 lb. at $305. He says this indicates a pullback in the market.
“I think when you look over at the futures market, this is the disconnect from the cash market,” he says. “This is where we actually had notable strength this past week.”
August live cattle were at $222 and August feeder cattle at $326.
“We have sort of known domestic supply is tightening, and it looks like that might get ramped up from two different reasons,” he says.
Those being the adjustments in imports from Mexico and the risk of New World screwworm the the domestic herd, as well as tariff announcements to Brazil and the broader tariff situation.
“You could pretty easily make an argument that the herd is known to be small, and some of those adjustments might make it even smaller from a beef availability perspective,” he says.
Even with this market uncertainty, Tonsor says there is notable producer optimism. He met with industry leaders, state beef councils and producers during the recent National Cattlemen’s Beef Association (NCBA) summer meeting in San Diego.
“I’ll call it a cautious tone with it because everybody knows there’s a lot of money at stake in the industry,” Tonsor says. “Now I want to interject here because we’ve had quite a bit of a run up in the cattle market, and that shows up in the producer sentiment.”
When it comes to the box beef cut out, there was a fairly big pullback last week with Choice on Friday at $379, down from $390 the prior Thursday. Select was down $366, down $12 from the prior Thursday.
Tonsor sees some softening in the beef demand through The Meat Demand Monitor, which reported a decline in consumer willingness to pay for meat, with 19% of households reporting improved finances and 34% reporting a decline in June.
Willingness to pay declined in seven of eight items for retail or grocery store for at home consumption and also decreased on seven of the eight meals that are tracked away from homes, which includes dinner from food service, specifically. The trend has shown a decline with June lower than May and May lower than April. Tonsor says consumers are becoming cautious.
“It’s not to say they don’t want meat protein — actually taste still leads today,” he explains. “Meat is having a moment in desirability. It’s not an anti-meat kind of thing at all. I think it’s a macroeconomic concern.”
He sees consumers finding different ways to use meat, stretch it by using it as an ingredient or having smaller portions and are more likely cooking at home versus eating out.
For example, they buy a pound of ground beef and use it in lasagna.
“You can put a few more noodles and a little bit less ground beef,” he adds. “So they still want meat, but if meat is expensive relative to other things in your broader budget, you’re finding a way to stretch that.”
Tonsor emphasizes this is a macroeconomic issue. It’s not about anti-meat, safety or product quality concerns. And unfortunately, cattle producers don’t have control or influence over GDP or household incomes.
Tonsor continues that the million dollar question lately has been if producers are ready to pull the trigger on herd expansion.
“If you are selling cattle for a fairly high price, and you’re comfortable with that, but you’re not necessarily comfortable with it being multi-year, how long will it last? Or you’re spending more to raise that calf than you ever thought you would, and you’re just cautious about it, those are going to give you some pause in pulling the trigger on heifer retention,” he says.
The July cattle inventory report from USDA NASS and the July Cattle on Feed report, which gives a breakdown of heifers versus steers, releases on July 25.
“The percentage of heifers that are in the yard is one of the best measurements for herd expansion,” Tonsor says. “As the population in the feedyard becomes more steers, that generally tells us as more heifers staying at home.”
Watching that retention metric, Tonsor says as the calf crop shrinks, steers and heifers on feed will decline, but it is the percentage of heifers that will be the difference.
“In the near term, you will have a two-year reduction right in beef availability because you took some of the heifers that would have went through the production system sort of immediately through the feedyard to give us beef and kept them at home,” Tonsor concludes. “Now that’s a necessary evil in order to grow the herd, but it will make the clinical tight beef supply story even tighter in the short term to later.”
