At the NCBA’s CattleCon 2025, Senior Farm and Ranch Broadcaster, Ron Hays, continued his conversation with Senior Protein Analyst for Terrain, Don Close. In part one of their talk, they discussed the 2024 Cattle Inventory Report. Today, they are focused on today’s beef consumers.
Coverage of CattleCon 2025 is powered by Farm Data Services of Stillwater, Oklahoma.
According to Close, modern consumers are keenly focused on the price and value of products they buy. “When we look at real per capita expenditures, we look at the demand improvement for beef and whole,” he explained. “We look at the improvement for demand in prime product – the upper 2/3 of product – and we look at ground beef demand and we compare those beef-on-beef comparisons to beef to the other species. We continue to gain market share.”
He is impressed with the phenomenal loyalty of consumers through the wreckage of the COVID pandemic and now, as prices are hiked. He said that the only good thing that may have come out of the pandemic is that consumers realized that they could experience restaurant-quality beef at home for less money.
However, Close knows that there is a breaking point for how much consumers will pay for high-quality beef. He said, “We monitor savings rates – they are down some. We look at delinquency rates on credit cards and car loans, and they are a little bit lower. We look at the unemployment rate, which is steady to higher. Certainly, that wealth index that is driven by the stock market and housing prices – that feeling of wealth – is still there. All of the indications we have at this point in time say that they are still willing to spend. We will find that trigger point before this is over with, but we don’t see that we are there, yet.”
For producers evaluating whether or not to retain heifers and regrow their herds, Close said it is going to depend on their forage conditions, confidence factor, and balance sheet.
“One thing I would add to that,” Close interjected. “If you take the convenience and the opportunity with the LRP and with the insurance products today… in these kinds of price levels, if you are not willing to have some kind of risk management program in place, don’t buy the cattle.”
Close described LRP as a game changer for the industry because it was designed for producers who aren’t capitalized or lack the market education or size to use futures.
He agrees with other industry experts who say that herd rebuilding is not likely to take place in any significant way; in fact, he predicts another decline in cattle inventory after this year.
“On a price outlook for fed cattle, throughout the fourth quarter, we were projecting a $2.10 spring high – I think we could get to that $2.15 or $2.20 level late year. When I was out giving that price outlook, I didn’t think we would do it the second week of January – I thought it would be May or June before we got there. I really think the correction that we are seeing in the marketplace so far this week is much needed and very healthy; they had been running too hard. I would like to see that seasonal consideration on feeder cattle, that we will see prices sag from today until that March/May time window and then start the big rally up.”
He added that after a fall-through, cattle feeders will have a better opportunity to buy replacements in the spring and advised producers to enjoy the high markets while they are here.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR at the top of the story for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
