by Steiner Consulting Group

Cow slaughter numbers typically jump at the start of the year. Sales tend to drop at the end of the year as auction markets close for the holidays. Some of the backlog becomes available in the new year.

In some cases, sales that would normally take place toward the end of the year are delayed into the next year for tax planning reasons. However, this has not been the case this year, providing further evidence that cull cows are increasingly scarce — a situation that is only expected to worsen heading into spring.

Last week, the USDA estimated cow-bull slaughter at 113,000 head, down 15% from the same week a year ago and 40% lower than two years ago. This week, slaughter is estimated to remain at similar levels. Comparisons to last year are somewhat skewed due to the effects of winter storms in January 2024. However, at 112,000 head, cow/bull slaughter is projected to be 41% lower than two years ago.

At this rate, could we see $400-per-cwt. 90s this year? It’s not out of the question.

Consider this: In the first three weeks of the year, cow/bull slaughter is down 137,000 head (-30%) compared to the same period in 2023. Domestic lean grinding beef prices declined in Q4 as slaughter numbers modestly increased and retail and foodservice demand seasonally slowed. Fig. 3 illustrates that ground beef prices typically decrease in November and early December. Retailers focus on stocking holiday items, and Thanksgiving meals tend to limit sales of ground beef. Foodservice sales also decline with the onset of winter.

But everything shifts at the start of the new year. Hams, turkeys and premium rib roasts are replaced by more economical items such as chicken, pork chops, ground beef and round/chuck roasts. Finding enough lean beef was a significant challenge last spring and summer, and buyers will find an even tighter market in 2025.

Last night (Jan. 15), the price of 81CL (chemical lean, meaning 81% lean, 19% fat on a chemical basis) coarse ground beef was quoted at $346 per hundredweight (cwt.), 21% higher than the same time last year and just shy of 2024’s annual high ahead of Labor Day weekend. Meanwhile, 90CL prices are beginning to climb, following the same upward trajectory as last year. At this rate, could we see $400-per-cwt. 90s this year? It’s not out of the question.

During the last cyclical peak (2014-2015), 90CL fresh grinding beef prices topped out at just more than $300 per cwt. Adjusted for inflation, that high equates to approximately $390 per cwt. today. Remarkably, 90CL boneless beef prices approached those levels last summer despite lean beef availability not being as constrained as in 2014-2015. Increased imports from Australia, Brazil and other countries, along with more fed-beef supply, helped bolster availability.

Beef demand at the consumer level appears to be in a much better place today than it was a decade ago. This raises key considerations for the year ahead:

• Cow slaughter this spring and summer is likely to run below last year’s levels.
• Import disruptions could occur due to a combination of weather, currency fluctuations and tariffs.

For now, high-lean grinding beef prices are supporting the value of chuck and round primals. While these items are typically lower in late spring and summer, the pullback may not be as significant this year due to the elevated price floor for lean beef.