The U.S. livestock sector is booming, fueled by lower feed costs, which have tumbled from record-high levels during the last two years.

That has helped renew interest in animal protein production growth. But labor, construction, equipment, land and cost of funds remain elevated, complicating expectations for the coming year, according to CoBank’s 2025 outlook report.

“As a result of a volatile market and poor pasture conditions, U.S. beef cow herd expansion is not expected to start until 2026 or 2027,” CoBank analysts said.

The shrinking herd will further support higher feeder and fed cattle values, and it would not be surprising to see fed cattle values eclipse $200 per hundredweight in the coming year, they said.

Carcass weights

Tight feeder supplies, low feed costs and excellent beef demand have yielded heavier carcass weights, which rose nearly 30 pounds or 3% in 2024.

This is up from a trendline of just 5 pounds over the last 20 years.

Low corn prices and tight cattle supplies mean days on feed will remain higher.

“With consumer beef prices already near historic highs, packer margins will remain under pressure — and likely negative — for a good portion of 2025 as retail and food service struggle to pass higher costs on to consumers,” the analysts said

While expansion might not yet be taking place on the livestock front, beef and chicken slaughter weights this year were the heaviest they’ve ever been.

Heavier weights are especially important for meeting consumer demand, which remains resilient despite inflationary pressures.

Consumption

“The USDA Economic Research Service projects per capita consumption of chicken, beef, pork and turkey to remain stable or grow up to 2% from 2024 to 2025.

As more consumers across the globe enter the middle class, the demand for animal proteins remains positive,” the analysts said.

Mexico is a top destination for U.S. poultry and pork and is a source of cattle for U.S. feedlots as pasture conditions worsen in country.

A good working trade relationship with Mexico remains vital on many fronts.

Over the past 30 years, U.S. pork exports to Mexico grew 1560% to 2.6 billion pounds, and chicken exports grew 624% to 1.6 billion pounds.

However, while Mexico is the top destination for U.S. pork and poultry, these segments have grown by diversifying export markets as U.S. reliance on China’s markets has waned.

Muted response

“Falling feed costs are being passed on to the consumer, which will position chicken well in 2025 both on restaurant menus and at home.

In the past, lower feed prices have led to a jump in production, but thus far the supply response has been more muted,” the analysts said.

Some metrics, however, do seem to be improving. Broiler chick hatchings were up about 6% year over year through much of 2024.

“Heavy investment in automation in the U.S. broiler industry should help dampen any upcoming disruption to foreign workforce availability,” they said.