Using a 60 per cent grading, this equates to a live price of $285 to $291 per cwt. delivered. Feedlot margins are now in negative territory with break-even pen closeouts near $300 per cwt. Western Canadian slaughter volumes have been lower than expected through November, causing the number of cattle on feed 180 days or more to increase.

Processing weights are at or near record highs. Weakness in the fed cattle market has caused the feeder complex to come under pressure. Given the value of the April live cattle futures, it appears that feedlot margins in the spring period could be underwater by $300 to $400 per head. Feedlot operators are exhibiting a cautious tone as they scale down replacement ownership.

Fed cattle supplies are not tight — they’re burdensome. In declining markets, feedlot operators hold back on sales in hopes of higher prices only to sell at lower levels once cattle become too heavy. It will take about three to four months to work through the backlog of market-ready cattle in Canada and the U.S.

U.S. cattle on feed as of Nov. 1 were 11.7 million head, down 2.2 per cent or 260,000 head from Nov. 1, 2024. More importantly, cattle on feed 180 days or more as of Nov. 1 were 1.3 million head, up 670,000 head from 12 months earlier. Dressed weights are up about 20 pounds from last year and 50 lb. from two years ago. U.S. November slaughter was down about 170,000 head from November 2024. Market-ready fed cattle supplies are building, not decreasing.

In Western Canada, cattle on feed in Alberta and Saskatchewan as of Nov. 1 were 1.037 million head, up one per cent or 5,709 head from Nov. 1, 2024.

Cattle on feed 180 days or more as of Nov. 1 were 152,279 head, up 3.2 per cent from last year. Over the past four weeks, western Canadian slaughter has been down about 25,000 head from year-ago levels. Cattle are starting to become backed up in Alberta feedlots. Steer dressed weights are more than 1,000 lb.

Consumer beef price remains high

Wholesale beef prices have been holding value, but packing margins are in negative territory. Earlier in November, Tyson Foods announced it was closing its beef plant at Lexington, Nebraska, and curtailing slaughter at its larger plant in Amarillo, Texas.

The beef market is experiencing softer demand as retail prices remain at record highs. Consumers in the U.S. and Canada are contending with inflation, which lowers buying power. Unemployment levels have been creeping higher over the past year in the U.S. and improving slowly in Canada. Consumer spending is expected to slow significantly in the first half of 2026, which will result in lower beef demand.

At the time of writing this article in early December, 850-lb. backgrounded mixed steers were trading at $450 to $460 per cwt. in central Alberta. In January and February, we’ll likely see the market shave off about $20 to $30 per cwt. from these levels.

There are a couple factors to consider for the feeder market. First, we’re expecting the U.S. border to open to Mexican feeder cattle in January or February 2026. Second, we’re expecting a marginal year-over-year increase in the U.S. and Canadian calf crops during the 2025 calendar year.

These calves will start to come on the market in the spring of 2026. Feed grain prices are expected to percolate higher. We’re expecting the barley market to rally $30 to $40 per tonne from current levels. Finally, feedlot margins are expected to remain in red ink for an extended period. History tells us that feedlot operators need to endure one full round of feeding and then there is a serious downward adjustment to the feeder market.

Price for bred heifers and cows supports expansion

Bred heifers and bred cows have been selling very strong. Prices for bred heifers have been quoted between $6,500 and $7,800. Second, third and fourth calvers have been in the range of $4,000 to $6,000. The cattle herd on both sides of the border has been slowly moving into expansion over the past year. Beef cow slaughter in the U.S. is expected to drop to 10-year lows, which is a positive signal.

Cow-calf producers and backgrounding operators should avoid selling in January and February. The fed cattle market is expected to experience a seasonal rally from mid-March through April. This will provide a good opportunity for sales. Producers shopping for grass cattle should step forward in February because the longer-term forecast calls for average to above-average precipitation during the spring period for Alberta and Saskatchewan. Pastures will be experiencing early development and remain favourable, enhancing demand for grassers.

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The 40-per cent tariffs were removed by the White House to bring down beef prices and should result in Brazilian beef moving into the U.S. once again. Talk that the U.S. government was considering reopening the U.S./Mexico border to Mexican cattle once again also circulated the market.

The February live cattle contract lost 0.625 cents per pound at 214.775 cents. Feeder cattle were down 2.150 cents in the January contract at 314.225 cents per pound.

The U.S. Department of Agriculture reported wholesale boxed beef prices were slightly firmer, with choice boxes up five cents at $371.28 per hundredweight and select boxes up $0.63 at $354.18/cwt.

The U.S. Department of Agriculture released updated cattle on feed data after the markets closed. Cattle and calves on feed as of Nov. 1, 2025, were down two per cent from the same point a year ago, at 11.7 million head. There were 11. 4 million head on feed as of Oct. 1, 2025.

Placements at feedlots in October came in at 2.04 million head, which was down 10 per cent from the same month a year ago.

Lean hog prices were down 1.950 cents per pound in the February contract at 77.725 cents per pound.

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Ontario packers were buying Grade A steers on a dressed basis at $527 per cwt., which equates to a live price of $316 per cwt. There appears to be stronger packer demand in the short term.

Wholesale beef prices made fresh historical highs in mid-August, with Choice product reaching US$405 per cwt., up US$15 per cwt. from a month earlier.

In central Alberta, 1,000-pound steers traded for $431 per cwt., f.o.b. ranch. In Ponoka, grass and mineral-fed Charolais-cross steers weighing 650 lb. moved through the ring at $604 per cwt. Compared to the last week of July, Canadian feeder cattle prices are up $20-30 per cwt.

As of August 1In Alberta and Saskatchewan, cattle on feed in 1,000-head plus feedlots as of Aug. 1 were 777,443 head, relatively unchanged from last year. However, cattle on feed 180 days or more totalled 203,285 head, up 16 per cent or 27,682 head from 12 months earlier. Market-ready fed cattle supplies are up from last year, but this hasn’t resulted in a weaker fed cattle market. Western Canadian marketing weights are similar to last year.

In the U.S., cattle on feed 150 days or more and 180 days or more are also above year-ago levels. Dressed weights are up about 15 lb. from last year and up 45 lb. from 2023. There is a backlog of market-ready fed cattle supplies in the U.S.

Feedlots appear to be content to hold cattle to heavier weights and hold out for higher prices given the fact the market has been trending upward. At some point, the market will turn and start to decrease, which could spur on selling of fed cattle from major feedlot operators.

U.S. packers have purposely curtailed the weekly slaughter pace in an effort to hold up the wholesale beef market. This has contributed to the build-up of market-ready fed cattle in the U.S.

Beef demand tends to remain firm until after the Labour Day weekend. During September and October, beef demand tends to make seasonal lows. Restaurant and grocery store spending tends to decrease in September as students go back to school and business travel subsides.

The function of the feeder cattle market is to encourage production and ration demand.

The U.S. beef cow slaughter is on pace to drop to 2.6 million head, down about 550,000 head from 2024. When the beef cow slaughter is this low, it’s usually the first sign of expansion activity. However, we haven’t seen significant heifer retention on either side of the border, which is the second signal for expansion behaviour. The U.S. Department of Agriculture is forecasting a minor year-over-year decrease in the U.S. calf crop for 2025, and we’ll likely see a similar trend in Canada.

In regard to rationing demand, please consider the following example. We mentioned that 1,000-lb. steers were trading for $431, which equates to a value of $4,310. A finished animal with a live weight of 1,500 lb. and a dressed weight of 900 lb. is valued at $4,500. Feedlots cannot add 500 lb. to an animal for 40 cents per pound. The cost per pound gain for barley and silage only is around 90 cents per pound. Feedlots buying these yearlings at the current levels are banking on significant upside in the fed cattle market.

History tells us that feedlot operators usually need to endure one full round of negative margins before there is a sizable downward adjustment in the feeder market. Feedlot operators basically need to turn their feedlot one time and have negative margins on all the cattle before they lower the bids for replacements. The feeder cattle market will be in the process of rationing demand through the winter and spring of 2026. Cow-calf producers can expect the feeder market to hold value through fall period.

The cattle markets are extremely sensitive to demand at historical highs. U.S. beef demand on a per capita basis is actually higher than last year. U.S. restaurant traffic has been running eight to 12 per cent above year-ago levels. Total spending at restaurants is up six per cent year-over-year. In Canada, restaurant traffic has been up 25-30 per cent year-over-year.

Notice that restaurant spending makes a seasonal low in September. This may result in softer wholesale prices and weaker fed cattle values. If the U.S. economy starts to weaken due to the Trump tariffs, beef demand will decrease as disposable income declines. This is the “black swan” variable that could cause the cattle and beef markets to weaken.

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Live bids in southern Alberta were quoted from $297 to $300/cwt.

Break-even pen closeouts for major feedlot operators are in the range of $275-$286/cwt. Margins have been in positive territory since the spring, and this has been a major factor supporting the feeder market.

Yearling steers off grass averaging 1,000 pounds have been trading for $405-410/cwt. in southern Alberta, while 500-lb. steers have been selling in the range of $660-$670/cwt. across the Prairies.

The U.S. cattle herd remains in a contraction phase. Lower feeder cattle supplies will result in a year-over-year decline in feedlot placements, which will cause lower beef production during 2026.

It appears Canadian barley and U.S. corn crops will come in larger than earlier anticipated. This has also contributed to stronger feeder cattle prices. Wholesale beef prices are down from the June highs, but beef demand shows no sign of easing.

U.S. cattle on feed inventories as of July 1 totalled 11.124 million head, down two per cent or 180,000 head from July 1, 2024. While inventories are below year-ago levels, it’s important to realize that U.S. cattle on feed 180 days or more as of July 1 were actually up 34 per cent from 12 months earlier. U.S. dressed weights are running 20 lb. above last year and 40 lb. above 2023. There is no shortage of fed cattle in the short term.

The U.S. weekly slaughter continues to trail last year. This will keep U.S. market-ready fed cattle supplies above year-ago levels throughout the summer and early fall.

In Western Canada, Alberta and Saskatchewan on-feed inventories on July 1 were 862,080 head, down one per cent or 9,026 head from July 1, 2024. Feedlots in the two Prairie provinces are more current than their U.S. counterparts. Cattle on feed 180 days or more were marginally lower than last year, while dressed weights were running similar to year-ago levels.

In Canada, the June slaughter was above June 2024, while in the U.S., the June slaughter was down from 12 months earlier.

Wholesale choice beef was trading at US$361/cwt. in early August, down from the June peak of US$392/cwt. Packing margins remain in positive territory despite the softer wholesale market. Larger carcass weights have partially offset the lower slaughter pace.

In Canada, restaurant traffic during the first week of August was running 30 to 35 per cent above year-ago levels. In the U.S., restaurants were taking in 10 to 15 per cent more customers than last year. U.S. consumer spending at restaurants has been running six to seven per cent above last year.

Grocery store sales have been running 1.5 per cent above year-ago levels. Data from Statistics Canada shows that Canadian spending behaviour has mirrored that of consumers south of the border.

The U.S. cattle herd remains in a contraction phase. The U.S. Department of Agriculture’s semi-annual cattle inventory report estimated the 2025 calf crop at 33.1 million head, down 429,000 head from the 2024 calf output. Heifers for beef cow replacement on July 1 were down 100,000 head from 12 months earlier; the number of beef cows with calves on July 1 was down 350,000 head from the year-ago level.

U.S. feeder cattle outside finishing feedlots as of July 1 came in at 34 million head. This compares to the July 1, 2023 number of 34.7 million head. (There was no survey in 2024 due to budget cuts.)

This is a modern-day historical low. The U.S. border remains closed to Mexican feeder cattle due to New World screwworm, and there is no signal that this will change anytime soon.

In Western Canada, we’re expecting Statistics Canada data to show a three to four per cent year-over-year decline in feeder cattle supplies outside finishing feedlots. The Canadian semi-annual report comes out in late August, and all eyes will be on this data.

In Western Canada, cow-calf pairs have been trading in the range of $6,500-$7,000 throughout June and July. This price reflects recent cull cow values, which have surged to the range of $3,200-$3,400. Currently, a 500-lb. steer is bringing back around $3,300.

Past history tells us that cow-calf producers make the decision to hold back heifers for herd expansion in the fall. This may tighten the feeder cattle supply beyond normal fundamentals. If there is significant heifer retention, this may cause the feeder market to overextend to the upside.

Feedlot operators usually have to experience one full round of negative margins before there is a serious downward adjustment to the feeder market. Therefore, cow-calf producers can expect the calf market to remain strong throughout the fall and winter.

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Visits from low-income consumers are down nearly double digits from last year and middle income is also declining. U.S. same-store sales dropped 3.6 per cent; the decline was the worst drop since COVID of 2020.

Wholesale beef prices have been hovering at historical highs during May. For the week ending May 3, wholesale choice beef was averaging US$343/cwt while select product was valued at US$324/cwt.

In Kansas, live cattle were trading as high as US$218/cwt. In southern Alberta, packers were buying cattle on a live basis at $294/cwt. Live cattle prices on both sides of the border have made fresh record highs during the first week of May. Break-even pen closeouts in Alberta are in the range of $255-$265/cwt, f.o.b. feedlot. Feeding margins have been favourable during the first five months of 2025, causing the feeder market to trend higher.

At the time of writing this article, larger-frame, lower-flesh Charolais steers averaging 850 lbs. were valued at $420/cwt in central Alberta while higher quality 500-lb. steers were bringing back $570/cwt.

Market-ready supplies on both sides of the border are at seasonal lows. Analysts use the placement data from the U.S. Department of Agriculture’s Cattle on Feed reports to project the number of cattle available for slaughter each month. You can see in the table here that the monthly numbers start to build in May and June. More importantly, supplies are not much different than last year’s.

Given the higher prices, U.S. packers have curtailed the weekly slaughter pace, and we find fed cattle supplies are becoming backed up in U.S. feedlots. Cattle on feed 150 days or longer in the U.S., as of April 1, were 3.272 million head, up 134,000 head from April 1, 2024. The average U.S. dressed weight for the week ending May 3 was 877 lbs., up 25 lbs. from the same week of 2024. The placement data reflects market-ready cattle supplies will be around 1.958 million head during June. Given the lower slaughter pace in March, April and May, market-ready cattle supplies will probably reach 2.2 million head on June 15.

In Western Canada, a similar environment is developing. Market-ready fed cattle supplies moved from an extremely tight situation in April to a rather burdensome environment in June and July. Market-ready fed cattle numbers in Alberta and Saskatchewan were estimated at 90,000 head during mid-April. This number increases to about 300,000 head in mid-June. Canadian packers have also cut back on the weekly slaughter as it’s harder to sell wholesale beef at the higher levels. When there are larger fed cattle supplies, the market usually trends lower.

U.S. first-quarter gross domestic product came in 0.3 per cent lower by quarter-over-quarter annual rate, down from growth of 2.3 per cent in the final quarter of 2024. Consumer spending is easing given the uncertainty in the economy. Remember, consumer spending and beef demand are highly correlated.

Restaurant and grocery store spending tend to make seasonal highs in May, then slightly soften in June and July. The main point is that demand is not increasing. Looking at past history, the live cattle market lags the economy by four to six months. Fed cattle prices will feel the effects of softer demand during the summer, which is right when supplies are increasing.

At historically high prices, markets also function to encourage expansion. The industry is bracing for significant heifer retention in Canada and the U.S. this summer. This will result in lower feeder cattle supplies outside finishing feedlots in the latter half of 2025.

Feedlot operators usually endure one round of negative margins before there is a significant downward shift in the feeder market. Given the deferred live cattle futures, feeding margins will slowly move into negative territory during the summer and fall period.

For August and September delivery, 1,000-lb. steers have been trading in the range of $345-$360/cwt, depending on the quality. Cow-calf producers can use that as a guide for purchasing grassers. Margins are fairly snug for backgrounding calves over the summer or for putting cattle on grass. Margins will eventually move into negative territory and when that occurs, it’s a sign the feeder market is at or near its highs.

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The fed market has remained relatively firm due to lower supplies of market-ready cattle. Strength in the fed market has been supportive for the overall feeder complex.

Statistics Canada’s livestock inventory report as of Jan. 1 had feeder cattle supplies outside finishing feedlots in Western Canada slightly higher than 12 months earlier.

Throughout January and February, many cow-calf operators were selling calves due to the U.S. tariff threat. Prices for feeders have climbed back to historical highs, which has also encouraged sales. Some backgrounders and finishers were moving cattle to custom lots south of the border.

Feeder cattle supplies are expected to tighten later in spring, which has spurred finishing operators to secure supplies.

During the last week of February, lower-flesh tan steers weighing 960 lbs. traded for $360 in central Alberta. Good-quality steers averaging 500-525 lbs. were actively trading in the range of $550-$575/cwt across the Prairies.

Cattle on feed in Alberta and Saskatchewan as of Feb. 1 were 1.013 million head, down two per cent or 21,205 head from Feb. 1, 2024. The on-feed number can be deceiving without looking closer at the data. Cattle on feed 120 days or longer as of Feb. 1 were only 187,917 head, down a whopping 96,515 head or 34 per cent from Feb. 1, 2024.

Market-ready fed cattle supplies are expected to remain relatively snug through mid-May before fall-placed calves start to come on the finished market. Steer carcass weights in Alberta are running 35 lbs. below year-ago levels, so feedlots are very current with production.

U.S. diverging

In the U.S., the opposite fundamental situation has developed. U.S. cattle on feed 150 days or longer as of February were 2.357 million head, down only 25,000 head from year-ago levels. The February slaughter will likely finish 150,000 head below last year, so we see a buildup of market-ready cattle during March. U.S. dressed weights are running over 40 lbs. above year-ago levels, which also confirms feedlots are backed up with market-ready supplies.

The U.S. continues to threaten tariffs on Canadian goods, with the situation very fluid at time of writing. The tighter fed cattle supply in Western Canada provides a cushion for fed cattle prices in the short term.

Apparently, U.S. beef is on the second wave of Canadian retaliatory tariffs. This will allow supply chains to manage the changes. There will be a surplus situation of beef in Canada during the summer, but we may see enhanced movement offshore, alleviating the supply situation.

The U.S. was initially part of the TPP (Trans-Pacific Partnership). In President Trump’s first term, he withdrew the U.S. from the TPP. However, that trade agreement’s agreed-upon beef volumes were not lowered when the U.S. withdrew. This is a partial win for Canada and Australia with additional access to countries such as Japan, Malaysia and Vietnam. These are smaller markets, but they can grow.

The feeder cattle market softened during the first week of February due to adverse weather and the earlier tariff threat.

However, by the end of the month, western Canadian feeder markets were back up near historical highs. Feeding margins are expected to remain in positive territory through the spring, which will continue to keep the feeder market at higher levels.

StatCan’s reported total yearlings (heifers for slaughter plus steers one year and older) on cow-calf operations and backgrounding operations as of Jan. 1, 2025 are at 587,300 head, up 1.4 per cent or 8,100 head from 12 months earlier.

Total calves in Western Canada under one year old outside finishing feedlots were 2.416 million head, up 31,600 head or 1.1 per cent from Jan. 1, 2024. This was a surprise to the trade. Now there has been a fair amount of sales and export movement over the past month. It’s hard to get a handle on the supply of feeder cattle that will come on the market during the spring period.

Heifers for beef cow replacement in Western Canada as of Jan. 1, 2025 were 465,900 head, up 1,500 head from last year. U.S. heifers for beef cow replacement as of Jan. 1, 2025 were only down about 46,000 head from 12 months earlier.

It appears the contraction phase in the cattle herd has stabilized and we’re expecting a sharper year-over-year increase in heifer retention during the summer and fall of 2025.

For the fall period, steers weighing 1,000 lbs. were trading in the range of $340-$350/cwt prior to March 4. After the U.S. tariffs were implemented on Canada, feedlots dropped their bids anywhere from $20-$50. There is a wait-and-see approach. Keep in mind, Canada is a net importer of feeder cattle, so this may have a minimal impact on the cow-calf producer.

When the market is at historical highs, producers have to assess risk/reward from a historical perspective. The market isn’t expected to fall apart but don’t expect significant upside from current levels.

If you are looking at buying grassers, the margins will be tight for these cattle because it’s hard to pencil out. For finishing feedlot operators, margins on incoming replacements barely cover the cost of the feeder animal and feed to finish. It’s hard to bank on further strength given the risks in the marketplace.

On a side note, the commitments of traders report from the U.S. Commodity Futures Trading Commission showed the commercial (packers) short position on live cattle futures was at an extreme earlier in February.

When this occurs, it’s a sign that packers have significant coverage in the cash market. We can say demand is full. Packers don’t need to be buying large volume of finished cattle at or near historical highs.

When this occurs, packers usually lower the price of wholesale beef to move product. This is exactly what has occurred through February as wholesale choice product has dropped nearly US$20/cwt. Packing margins are narrowing or being squeezed, which contributes to the lower U.S. slaughter pace.

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The 2024 calf crop was only marginally lower than the 2023 output. This was largely due to the decline in the beef cow slaughter. Beef cows that had calved as of Jan. 1, 2025, were only down 149,500 head from 12 months earlier.

U.S. dairy cows calved as of Jan. 1 were up 2,500 head from year-ago levels. It’s important to note many Holstein-Angus cross calves qualify as Certified Angus Beef in the U.S. market.

Feeder cattle prices, meanwhile, reached historical highs in January 2025. I’ve received many calls from cow-calf producers asking about the price forecast for the fall. I wouldn’t be surprised if calf prices topped out in the fall of 2025, then started to trend lower in 2026. It’s that time of year when we discuss total inventory numbers and projections for 2025 and 2026.

First, the U.S. beef cow slaughter for 2024 finished at 2.907 million head, down from 675,000 head from the 2023 processed number. The dairy cow slaughter for 2024 was 2.775 million head, down 358,900 head from the 2023 processed number.

Looking forward, we expect to see a similar year-over-year decline in the beef and dairy cow slaughter for 2025. The lower beef and dairy cow slaughter is sufficient to maintain the calf crop at current levels. This is the first sign of herd expansion activity because it’s the easiest and lowest-cost behaviour for the cow-calf producer.

The total calf crop for 2024 came in at 33.529 million head, down only 33,500 head from the 2023 output of 33,563 head. We basically say that the 2024 calf crop was the same as in 2023.

Heifers for beef cow replacement as of Jan. 1, 2025 were down about 46,000 head and milk replacement heifers were down around 57,000 head. This trend is expected to reverse in 2025. During the summer and fall of 2025, we expect U.S. cow-calf producers to hold back about 400,000 to 500,000 head of heifers for herd expansion. We’re expecting about 100,000 head of dairy heifers to be retained.

The calf crop for 2025 is expected to be similar to 2024 in the range of 33.6-33.8 million head, slightly higher than the 2024 output. The calf market will likely peak during the first round of heifer retention.

Feedlot operators have experienced a profitable round of feeding this winter. When a finishing operator is purchasing replacements, they will often bid up the price of feeder cattle so margins cover the cost of feed and interest only.

They need about six to eight months of negative margins before there is a serious adjustment in the feeder cattle price. We don’t believe prices are going back to values from three or four years ago; however, a 500-lb. steer trading in the range of $460-$480 is more reasonable, long-term, instead of the current value of around $550.

Given our projection, feeder cattle prices will likely hold value through the fall and early winter of 2025-26, then start to decrease next spring. There is potential for a serious downward adjustment in the feeder market in the summer and fall of 2026. We expect prices for bred cows and bred heifers to peak this fall, then soften. When owning cows, you have to look at a 10-year time frame and believe they are priced at fair value over the long run.

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Using a 60 per cent grading, this equates to a live price of $276/cwt delivered. This is up from the early January prices of $432-$438/cwt. Wholesale beef prices continue to trade at or near historical highs. The healthy packer margins are encouraging the slaughter pace. Western Canadian steer carcass weights are running 47 pounds below year-ago levels as market-ready fed cattle supplies tighten in Western Canada. Feeder cattle prices made fresh historical highs in early February as healthy feedlot margins encouraged finishing operators to reload. In central Alberta, larger-frame lower-flesh tan mixed steers averaging 1,000 lbs. on light grain and silage diet with full processing data sold for $355.

Steers averaging 500 lbs. were readily selling in the range of $525-$550/cwt across the Prairies. Tariff concerns have spurred on marketings from cow-calf producers resulting in larger auction market volumes. For August delivery, the market for 1,000-lb. steers off grass is relatively even with nearby values.

Cattle on feed 120 days or longer in Alberta and Saskatchewan, as of Jan. 1, 2025, were 110,617 head, down 42 per cent or 77,428 head from Jan. 1, 2024. Market-ready fed cattle supplies in the short term are rather snug, resulting in the stronger Alberta market. Given the placement data on the Alberta and Saskatchewan Cattle on Feed report, market-ready fed supplies will continue to decrease into April and early May before increasing in June and July.

During late January and early February, there was an increase in fed cattle exports to the U.S. We’ll likely see this export pace continue as tariff fears loom over the cattle market. In the U.S., it’s a demand-led rally in the fed market. Cattle on feed 150 days or longer as of Jan. 1, 2025 were 2.304 million head, up 1.2 per cent or 27,000 head from Jan. 1, 2024.

This comes as average weights are up 46 pounds from year-ago levels. Supplies are not considered tight south of the border. U.S. first- and second-quarter beef production will likely finish similar to year-ago levels.

The latest data from Statistics Canada showed sales at food and beverage retailers during November were down 1.6 per cent from October. Sales at Canadian supermarkets and other grocery retailers were down 1.5 per cent from a month earlier.

The Canadian beef market is experiencing sluggish demand due to weaker consumer spending. South of the border, U.S. consumer spending during the fourth quarter was up 4.2 per cent. on a seasonally-adjusted annual rate.

Wholesale choice beef during the first week of February was trading at US$330/cwt while select product was quoted at US$317/cwt. It’s important to realize these prices are historical highs and above the COVID-19 pandemic price levels. The nearby wholesale beef market has incorporated a risk premium due to uncertainty in beef production in the deferred positions. Beef is typically sold on longer-term contracts. Strength in the summer and fall market is pulling up nearby values.

The U.S. calf crop for the 2024 calendar year was estimated at 33.529 million head, down only 34,000 head from the 2023 figure of 33.563 million. This was higher than we were expecting. The Jan. 1 U.S. Department of Agriculture inventory report had heifers for beef cow replacement at 4.672 million head, down only 46,000 head from 12 months earlier. The Canadian Livestock Inventory Report will be released Feb. 25.

We’re expecting the Canadian calf crop to come in at 4.25 million head, down 35,000 head from the 2023 output. U.S. and Canadian cow calf producers are expected to hold back heifers for herd expansion during the summer and fall. This will result in lower feeder cattle supplies and keep the market supported at the current levels.

Trade resumes

In late November, the U.S. closed the border to Mexican feeder cattle after a positive detection of new world screwworm (NWS) in southern Mexico. On Feb. 1 this year, USDA’s Animal and Plant Health Inspection Service (APHIS) announced the resumption of cattle imports from Mexico.

We’re expecting the U.S. to import 150,000 to 200,000 head per month of Mexican feeder cattle in February and March. To put this in perspective, Canadian feeder cattle exports to the U.S. during all of 2024 were approximately 151,000 head. The U.S. usually imports about 1.2 million head from Mexico per year. The closure of the border contributed to the stronger feeder and fed cattle prices in Canada and the U.S. The resumption of U.S./Mexican feeder cattle trade will weigh on the cash and feeder cattle futures.

At the time of writing this article, the implementations of U.S. tariffs and Canadian retaliatory measures were delayed for 30 days. However, the threat remains. This is the wild card moving forward.

Barring tariffs, we expect the Alberta fed market to remain firm and make fresh historical highs in April or May. There will likely be some pressure in June and July on the fed cattle market as market-ready fed cattle supplies increase on both sides of the border. The feeder market is expected to remain firm throughout the spring and summer.

If heifer retention occurs as expected, this will be supported, but with the market at historical highs, the cattle market has factored in the lower supplies in the deferred positions. Don’t expect further upside moving forward. The resumption of U.S./Mexican trade will also temper the upside and weigh on the market in the short term.

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The market appears to be incorporating a risk premium due to uncertainty in beef production in both Canada and the U.S. This has provided Alberta feedlot operators opportunities to lock in favourable margins for the second quarter of 2025.

Feeder cattle prices for short-keep replacements have surged over the past month as the margin structure has improved. Cattle producers have been inquiring over the past month regarding the price outlook for the first and second quarters of 2025.

Cow-calf producers are looking for marketing signals on yearlings while backgrounding operators are also timing sales on fall-placed calves. Therefore, in this issue, I’ll discuss the fed cattle supply projections for the first half of 2025.

U.S. cattle and calves on feed for slaughter in feedlots with 1,000-plus-head capacity as of Dec. 1 totalled 11.982 million head, down 34,000 head or 0.3 per cent from the Dec. 1, 2023 number of 12.016 million head. U.S. feedlot placements during November were 1.796 million head, down four per cent or 69,000 head from the November 2023 figure of 1.865 million head. U.S. feedlot marketings during November were 1.725 million head, down 26,000 head or one per cent from November 2023 marketings.

The U.S. Department of Agriculture’s December Cattle on Feed report was considered neutral for the market in the short-term. Most cattle producers look at the first page of the report. However, the important data is on page five of the report, which shows feedlot placements by weight category. In Table 1 here we have the placements by weight category from the August through December Cattle on Feed reports.

During August and September 2024, total U.S. feedlot placements were down 69,000 head from the same months of 2023. During this same time frame, feedlot placements under 800 lbs. were down 115,000 head. We assume that the placements gain about three pounds per day. Feeder cattle under 800 lbs. probably gain about 2.3-2.5 lbs. per day on average while feeder cattle over 800 lbs. probably gain about 3.3-3.5 lbs. per day on average.

We can add up the number of cattle that will be available for each month. For our April projection, we would start with the August 2024 placements under 600 lbs. Onto this number, we would add the September placements in the 600- to 699-lb. category and the October placements in the 700- to 799-lb. category and so on.

We need the December and January placements to project the total number of cattle available for April but we have a good idea how the trend is developing.

Notice in Table 2 that the number of steers and heifers available in April is projected to be only 1.653 million head, down 50,000 head from April 2024. This is also the lowest number of cattle available in the first half of 2025.

If we do the same exercise for the Alberta and Saskatchewan Cattle on Feed reports, we could see a year-over-year decline of 15,000 in April and 21,000 head in May. Market-ready supplies of fed cattle will be down sharply from year-ago levels on both sides of the border during April and May.

The year-over-year decline in market-ready fed cattle supplies is considered bullish for the feeder market during the spring of 2025. It appears feedlot operators will experience healthy margins which will cause them to bid up the price of replacements. Strength in nearby April live cattle futures will pull up the deferred contracts as well.

The live cattle futures complex has a characteristic known as the “constellation of prices.” This is where the deferred live cattle futures behave or move in tandem with the nearby contract.

If the April live cattle contract is making fresh contract highs in late March, the June and August live cattle futures will also be making fresh contract highs even though market-ready fed cattle numbers are higher in June compared to April. Plan to sell your yearlings or backgrounded cattle in the spring.

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The U.S. Department of Agriculture’s annual cattle inventory report was released after the close, with 86.7 million head of cattle and calves on U.S. farms as of Jan. 1, 2025. That was down one per cent on the year and the lowest level for the start of the year since 1951. Of the total, cows and heifers that have calved came in at 37.2 million head were down from 37.4 million the previous year.

The April live cattle contract was up by 0.800 cents per pound at 202.300 cents.

March feeder cattle futures were up by 2.525 cents per pound at 275.725 cents per pound.

The U.S. Department of Agriculture reported wholesale boxed beef prices were firm on the day, with choice boxes up $0.20 at $327.68 per hundredweight and select boxes up $1.17 at $317.07.

Lean hog prices were weaker, with the April contract down 1.575 cents per pound at 90.350 cents.

Uncertainty over impending U.S. tariffs on Canadian and Mexican imports kept some caution in the livestock markets, as both countries are major trading partners with the U.S.

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