Second Quarter a Bellwether for Balance of 2025

The second quarter of 2025 could be an inflection point for the cattle and beef complex. There are four specific developments going on that could have a huge impact on the market for the remainder of 2025 and beyond.

1. Heifer Retention May Be Beginning

The April Cattle on Feed report gave the percentage of heifers on feed for April 1, at 37.64 Percent. That compares to 38.70 percent as of January 1, 2025, and 38.56 percent on April 1, 2024. While 37% is still categorized as a level of liquidation, the trend is showing that efforts to retain heifers are most likely getting under way.

There is controversy with the percentage of heifers on feed data and whether the increase in beef-x-dairy heifers being fed could be inflating the percentage. There is probably some truth to that point, which supports the statement that some level of beef herd heifer retention is beginning.

2. Fewer Heifers Selling at Auctions

As of the last few weeks of April, heifers as a percentage of auction receipts had dropped to levels that are comparable to the percentage of heifers in auction markets in 2014 and 2015 – the last aggressive heifer retention phase. While the auction market heifer data is not nearly as reliable as the Cattle on Feed data, the timing of the decline cannot be ignored.

The next report showing the percentage of heifers on feed, which will be the July Cattle on Feed report, will be critically important.

If heifers as a percentage on feed drops again, it will also measurably drop the availability of replacement cattle for cattle feeders. And it will confirm that the industry has started the rebuilding phase in earnest.

If the percentage of heifers on feed does not decline, there will not be enough heifers from the 2024 calf crop remaining available to have significant heifer retention.

3. Weather and Pasture Conditions

There has been an abundance of spring rain April through beginning of May in parts of Texas, Oklahoma, Arkansas and Missouri. While rain has not been as abundant over most of Kansas, Nebraska and the Dakotas, there has been enough rain across a substantial portion of cow/calf production area. That has restored ground moisture and is especially beneficial for restoring surface water for stock ponds to give producers a higher level of confidence that weather conditions will support herd expansion plans.

There is still caution because areas in the West, Northern Plains and portions of the Southeast complex are still exceptionally dry. Long-range forecasts are still calling for dry conditions in these regions for the summer.

The futures market is an anticipatory market. As soon as there is confirmation that rebuilding is starting, the futures market will not wait for beef supplies to increase.

4. Trade Remains a Question Mark

Year-to-date beef exports are down 4%. February beef exports were down 11%. There is so much uncertainty in the global trade arena right now because of tariff uncertainty and economic instability. Any slowdown in exports will increase domestic beef supplies and potentially pressure domestic retail prices down from their high peaks.

A Lot Can Change by July

Risk management is of exceptional importance right now. The futures market is an anticipatory market. As soon as there is confirmation that rebuilding is starting, the futures market will not wait for beef supplies to increase. Futures prices will start to decline in anticipation of what’s coming.

Regardless of the outcome, the April through June period is going to be a bellwether for the remainder of 2025.