40 NEBRASKA CATTLEMAN December 2024 PEERS CATTLE MARKET OUTLOOK IN 2025 ELLIOTT DENNIS, PH.D., | ASSOCIATE PROFESSOR LIVESTOCK AND MARKETING ECONOMIST, UNIVERSITY OF NEBRASKA-LINCOLN Figure 1. Beef Price-Quantity Relationship CONTINUED ON PAGE 42 The 2024 market year has truly been historic in many ways. As we come to the close of this year, consider a few of these: • Cattle weights broke seasonal trends in April and remained elevated during summer months. On average, harvested carcasses have weighed approximately 15 pounds more than historical averages. • Feeder cattle prices rebounded in many states, posting some of the highest nominal prices ever and, in some cases, higher real prices than in 2014. • Consumer ground beef demand has remained strong, keeping prices for 90 percent lean beef trim, incentivizing packers to grind chuck and round primals, and has kept slaughter cow prices high, slowing herd expansion. • Harvest corn prices have been some of the lowest inflated-adjusted prices ever received by producers since 2015 to 2020 and the ethanol mandate in the mid2000s, making cheap primary and residual feed for feedlots. • Retail prices for all meat products, especially beef, have continued to rise. The fresh beef price has risen 40 cents since January and will finish near $8.25 per pound. PRICE FORECASTS FOR 2025 To provide clarity and a breadth of opinion, I have compiled my own forecast and then compared it to organizations for which I provide input, namely the U.S. Department of Agriculture Economic Research Service (ERS) and the Livestock Marketing Information Center (LMIC). I compare production and prices where possible and provide a “composite” forecast that producers can use to represent an average of opinions. In addition, for price estimates, I include the CME futures contract prices plus a Nebraska basis adjustment. Table 1 (on page 42) shows these forecasts across different individuals/organizations. KEY MARKET DRIVERS FOR 2025 Here I review the fundamentals I believe will drive the market in 2025 and are the basis for my quantity and price projections by quarter in 2025. CONSUMER DEMAND Beef demand is a function of the quantity consumers are willing to purchase and certain prices. Whether beef demand increases or decreases is a function of both these factors. Consumers have shown exceptional resilience at higher prices in 2024. All expectations are that retail beef prices will continue to rise with moderating inflation. Forecasted inflation-adjusted retail beef prices are likely to be similar to 2021. The question is what will happen with the quantity consumed by consumers? I expect consumers to purchase less beef at higher prices in 2025 than in 2024, causing beef demand to soften slightly and lessen the need for as much beef production. I attribute this weakening primarily to lower consumer confidence, borrowing interest rates and rising credit card default rates. I project consumers to spend $476 per capita on beef in 2025, with the all-fresh beef price to average $8.32 per pound nominally, which implies an average per capita beef consumption of 57.2 pounds. See Figure 1. Notes: Annual, Retail Weight, Deflated All-Fresh Retail Price; Numbers represent calendar years; Text indicates forecasts for 2025 by various organizations
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