North American cattle prices have been at record highs for almost two years as a result of lower cattle numbers and strong consumer demand for beef, and cattle and beef supplies are likely to get a bit tighter in the future, according to analysts.

U.S. cattle slaughter declines in 2025 are expected to outpace carcass weight gains, and beef production is expected to decline 420,000 metric tons — or 3% — compared to 2024, Rabobank analysts said in the latest “Beef Quarterly” report.

“More significant beef production declines are not likely until U.S. producers retain heifers. Continued drought and price volatility are delaying investment,” the analysts said.

The U.S. herd has stabilized, but there is no sign of rebuilding, they said.

Cow slaughter

January to October beef cow slaughter was 17% below year-ago levels — on top of a 12% decline during the same period of the previous year.

“The liquidation of the U.S. cow herd has stopped, but the transition to rebuilding remains stagnant,” they said.

The annualized culling rate during the last 10 months has averaged 10%, which is equal to the 10-year average. Herd expansion is more common with rates of 9% or less. In addition, heifer retention has remained relatively low during the fall run.

USDA reported the percentage of heifers in feeder cattle and calf auctions is averaging 40% since September. That is the smallest percentage since 2020, but a heifer sales mix less than 38% is typical during rebuilding years, the agency said.

Feedlot numbers

Despite lower U.S. cattle numbers, feedyards continue to find more cattle.

“A relatively high percentage of heifers being sold off farms and ranches, continued drought challenges, and strong feeder cattle and calf imports are minimizing the decline of placements into U.S. feedyards,” the analysts said.

January to September placements totaled 16.5 million head. That is down 4% compared to last year at this time and compares to a Jan. 1 feeder cattle and calf supply outside feedyards that was down 7% year-over-year.

“More than 60% of U.S. beef cow herds are experiencing moderate or worse drought today,” they said.

Cattle imports

That’s showing up in higher cattle imports. Since Jan. 1, feeder cattle and calf imports from Mexico and Canada are up 390,000 head, a 52% increase compared to last year.

Live fed steer prices for the week ending Nov. 23 averaged $185.61 a hundredweight, according to the Livestock Marketing Information Center.

Feeder steers weighing 600 to 700 pounds averaged $290.15 cwt. in the north central region, according to USDA.

Beef demand

On the demand side, the appetite for beef remains unfazed by higher retail prices.

The USDA reported a new record-high all-fresh beef retail price in September at $8.21 a pound.

That is 0.6% higher than August and 5% higher than September 2023.

The January through September average price is 7% higher than a year earlier at $7.99 a pound. In the same nine-month period, beef production is relatively steady, and per capita supplies are 2% higher.

“As a result, year-to-date consumer beef demand is 5% higher than last year and at levels not seen since 1986, even outpacing 2022 demand through September,” the analysts said.