Carcass Weights Only Go So Far

It is easy to look at macro numbers for cattle and beef and come to the conclusions that heavier carcass weights are making up for the lower number of cattle and that beef demand keeps reaching higher levels. But the industry dynamics are more complicated than that.

Heavier Weights Make Up The Pounds

The number of cattle slaughtered through the middle of May declined 3.6% versus a year ago, while beef production remained steady compared to last year – thanks to heavier carcass weights. Production was down just 0.3% on a year-to-date basis.

The very large spread between cost of gain in feedlots and the value of that gain when the cattle are sold to packers has continued to incentivize cattle feeders to push cattle to record weights. On a year-to-date basis weights have outpaced year-ago levels by 3.2% or 29 pounds per head.

The increase in weights has added 260 million pounds of carcass weight to beef production. This is the beef equivalent of an additional 283,000 head.

Is Consumer Demand the Leading Cause of Retail Price Increases?

If I use this data as an approximation of the supply situation and assume that beef demand was unchanged versus a year earlier, we could expect prices to be 0.6% to 1% higher than year-ago levels. Then, when I observe that choice cutout values are up 10.6% year-to-date and 5-area average fed steer prices are up 14.8% over the same period, I could believe that beef and cattle demand have increased substantially!

The supply side data is incomplete, however, when just looking at slaughter data. If I add in the trade data and cold storage changes, we realize that net beef supplies grew by more than 4%. If demand were constant versus the same period of last year, prices should have been down 8% to 12%.

During Q1 2025 beef demand, measured with the USDA all-fresh retail beef price, was up about 7% and grew at double the pace of the same quarter during 2024. This is great news for the industry, especially as it came during a time of growing market uncertainty and concern about consumer confidence.

But steakhouse restaurants, grocery store chains and consumers don’t view – or demand – all pounds of beef the same.

It is easy to think at a macro level that an increase in beef production due to extra carcass weight has solved the industry challenge of too few head.

Number of Available Cuts Is a Big Factor, Too

But steakhouse restaurants, grocery store chains and consumers don’t view – or demand – all pounds of beef the same. The middle meat or steak items are as much piece count driven as they are weight driven. As soon as a grocery store or restaurant chain sets a steak cutting specification for thickness and lets weight float, the game—and resulting market signal—has changed.

These entities set thickness specifications to create a better eating experience as there is less risk of over-cooking in the restaurant or at home.

Heavier average carcass weights yield heavier average steaks of a consistent thickness but rarely add to the total number of steaks derived from that rib or loin primal. Some very high value thin meats, like skirt steaks, rib lifter meat, tri-tips and even briskets, to some degree, would also fall into this category of heavier carcass weights that don’t solve supply issues, as they are sold as a whole piece and there is only one on each side of the carcass.

Meanwhile chuck and round primals and lean trimmings are less piece count dependent, as more chucks and rounds enter the ground beef supply chain.

This difference results in the market somewhat “over-pricing” the primals and cuts that are piece count sensitive.

It also increases what packers would view as “carcass contribution,” i.e., the percent that the value of that primal or cut lends toward total carcass value.

This has the potential for economists and analysts like me to overestimate demand shifts. We may attribute the extra price increase as increased demand for the total weight of steaks produced when the price increase was really driven by a supply change in the number of steaks available.

Adding extra carcass weight is the only near-term way for the industry to supply the additional beef that the consumer wants. But it isn’t and can’t be the long-term solution to meeting the “quantity of beef demanded” because that answer has to include some consideration for the number of 0.75”, 1” or 1.25” thick ribeye, strip and tenderloin filet steaks – and how much restaurants and consumers are willing to pay for them.