Thriving With Shrinking Supply
Beef suppliers shift management to capitalize during shrinking cattle numbers.
February 20, 2025
Looking back on 2024, how would you sum up the year in the cattle business? Even as the nation’s cow herd contracts, “more pounds” and “higher quality” have been common themes. Specific to commercial cattlemen: It still pays to focus on carcass merit, in addition to other economically relevant traits.
Weights buoy production volume
One of the most impactful metrics for the beef industry in 2024 was the escalating average weight of fed steers and heifers. The feedlot and packing sectors each faced tighter supplies, encouraging feedlots to continue the trend toward extended days on feed while packers were, at times, content to capture more pounds per shackle with reduced head counts.
The combined effects drove hot carcass weights to average 21 pounds (lb.) heavier than in 2023, including nine total weeks with 30+ lb. year-over-year increases in the May-June and September-October periods.
Historically advantageous feedlot cost-of-gain values, mostly just north of $100 per hundredweight (cwt.), were couched against a fed-steer live price near $187 per cwt. for the year.
This, combined with widespread adoption of the latest feed technologies, incentivized feeders to add days on feed as the return to weight gain extended to previously unthinkable finished weights.
For 2024, federally inspected cattle harvest was down 3.8%, more than 24,000 head per week. However, fed-steer and heifer slaughter held at a much steadier pace with 2023, resulting in just a 0.5% decline. The remaining shortage in annual slaughter was highlighted by a 19% reduction in beef cow harvest and a 23% decline in the number of dairy cows harvested.
Total beef production tonnage in 2024 was buoyed by fed-cattle carcass weights. Despite dramatically reduced cow slaughter and a surprisingly small drop in fed-cattle harvest, annual beef production dipped only 0.8% below 2023. But, it was still 5.2% under the 2022 cycle-high for production volume.
Quality rising again
Recent cattle-feeding trends have boosted marbling, helping to elevate carcass quality. Annually, average feedlot stays elongated to near 195 days, and record-heavy carcass weights played a role in pressing the combined Choice and Prime quality grade average to 83.4%. This was punctuated by USDA Prime carcasses slightly surpassing the backlog-driven record of 10.2% during 2020’s pandemic.
While the latest annual record for Prime, 10.7%, was fueled by extra feeding days, it would not have been possible without decades of genetic improvement for marbling. For example, in the Angus breed, the average expected progeny difference (EPD) for the marbling trait has increased from +0.40 for cattle born in 2005 to +0.91 for cattle born in 2024.
Heavier carcass weights, coupled with the increasing Prime carcass share, marked a new record in overall Prime carcass tonnage, despite smaller fed-cattle slaughter last year. The 6.2% Prime volume increase in 2024 is 3% higher than the prior record set in 2022.
Prime production has gone up notably since 2013 and has subsequently been met with exceptional consumer approval. The cutout premiums for Prime over Choice have found a modern trading range averaging $42.81 per cwt. in the past four years, exactly double that of the prior decade’s average. This happened concurrently as Prime carcass tonnage (total carcass weight) more than tripled, moving from an estimated 13.9 million lb. weekly to 45.3 million lb. in 2024.
The total USDA Choice grading percentage entered a stable, record-high era in 2020, posting little variance in tenths of a point above 72% for the past five years. Last year saw just a 0.04 percentage point drop in the Choice percentage across 52 weeks, giving up that small ground to Prime growth.
USDA Select, at its lowest point in modern history, comprised just 13.5% of fed-cattle production, down from 14.6% a year ago. Coming off the record average $20.10 per cwt. Choice-Select price spread in 2023, the 2024 pattern held the spread narrower through the third quarter. Yet the fourth quarter, powered by demand for middle meats, featured a run toward the widest single-week Choice-Select spread on record at $38 per cwt., boosting the year’s average to $15 per cwt.
Table 1: Weekly steer and heifer harvest vs. carcass quality production
CAB supply trends
Calendar year production trends for the Certified Angus Beef ® (CAB®) brand followed superior marbling achievement to chart a record 37.3% carcass certification rate, a point higher than the prior year. The brand’s Prime product supply grew by a strong 15% compared to 2023, comprising a record-large 13% of total certified carcasses at 771,000 head.
With just a portion of licensed packing partners on board with the brand’s Prime label, sales growth in the most premium of the brand’s quality offering are not fully tapped.
As reported by Urner Barry, the CAB (premium Choice only) cutout premium, compared to USDA Choice, was $1.66 per cwt. smaller in 2024 with an annual average at $15.14 per cwt. The CAB cutout premium shifted to range between $15 and $19 per cwt. beginning in 2020, breaking out of the $8- to $10- per-cwt. range of previous years. The cumulative grid premium value of USDA Choice plus CAB has added between $80 and $100 per head to premium-Choice-CAB-qualified carcasses in the past four years with a calculated $81-per-head average for 2024.
CAB growth challenges rest solely on supply constraints, much like the greater beef complex. Unique to the brand, however, are limitations brought about by record-heavy carcass weights.
Per the brand’s 10 carcass specifications, cattle above the upper carcass weight limit of 1,100 lb., those surpassing the ribeye area limit of 16 square inches (in.), or having backfat thickness greater than 1 in. are disqualified. More carcasses have been excluded due to these reasons as weights and days on feed have advanced.
Increased marbling deposition across Angus-type carcasses was the offsetting factor in the brand’s ability to grow supply.
Prices up across the board
Total harvested cattle supplies continued to tighten in 2024, led by the dramatically smaller domestic cull cow harvest. This drove 90% lean beef trimmings to achieve a 22% price increase over 2023. This underpinned all beef prices due to U.S. consumers’ appetite for ground beef, comprising roughly 50% of average beef consumption. A spike in imports of lean grinding material partially offset the supply void, but it couldn’t alleviate inflationary effects of lagging domestic production.
With grinds underpinning prices, total beef demand continued to chart a strong upward course across all beef offerings. Widely regarded as a leading expert on the topic, Glynn Tonsor at Kansas State University published a recent Beef Demand Index chart depicting a spike in the index from 89.5 in October 2023 to 96.6 in October 2024. Excluding the backlog supply calamity in the spring of 2020, the index has not achieved this strength since 2005.
Wholesale carcass cutout values pressed higher in 2024 as packers struggled to align sales revenue with escalating cattle and overhead costs. The comprehensive cutout value, describing all fed-steer and heifer beef cuts regardless of quality or sales type, increased 3.7% vs. the prior year. The average for the year was $3.06 per lb., with the weekly high of $3.24 per lb. achieved in early July. The long-term trend shows a steady inflationary wholesale cutout price trend with a 39% increase over the recent five-year period.
Further down the supply chain, the retail “all fresh” beef price was 4.6% higher in 2024 with a $7.94-per-lb. average across all cuts. Like the wholesale trend, retail prices were up 37% since 2019.
Fed-cattle prices responded to tighter supplies and leverage shifting from packers to cattle feeders, resulting in a 6.8% annual increase. This marked the live fed-steer price average at $1.86 per lb. Since 2019, the five-year trend has been much more dramatic, with a 60% rise in fed-cattle values.
However, much of the uptrend for the period can be attributed to recovery from devastatingly low prices that bottomed just under $1.00 per lb. in July 2020 (pandemic backlog). The largest movement occurred in 2022-2023 with a cumulative 44% price increase over two years. Early in 2025, significant price advances have given strong indications that another upward shift in the fed-cattle trading range lies in store this year.
Looking ahead
Not uncommon to moving cattle cycles, beef and cattle prices have been resoundingly affected by shifts in supply. Drought cycles across important cattle production regions have generated lasting effects, currently slow to resolve. The supply chain has adjusted through changes in cattle management (i.e., weight targets) and the import-export balance. Yet, impressive consumer beef demand, while only casually analyzed in the cattle sector, is playing a significant role in the face of higher prices and further tightening supply.
It is also clear that consumers, both domestic and international, continue to choose our product. It’s reliably the most preferred protein.
The current cattle-feeding economics driving record-heavy weights have had an ancillary, favorable effect on marbling deposition. Rising proportions of CAB-brand premium-Choice and Prime product have provided a supply ballast against smaller harvest levels, continuing into 2025.
Cattlemen throughout the supply chain should continue to apply thoughtful pressure on carcass quality, combining genetics and management toward continued consumer demand and economic success.
Editor’s note: Paul Dykstra is director of supply management and analysis for Certified Angus Beef.
Topics: Management , Feeder-Calf Marketing Guide , Marketing
Publication: Angus Beef Bulletin
Issue: March 2025
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