US beef prices increased by 15% across the board in 2025 and are projected to rise even further this year.

Low inventories are fueling the cost surge and there are little signs that producers are rebuilding their cattle herds.

US cattle inventories are at a 75-year low at 87 million head nationwide. Beef prices are projected to rise by 6.9% this year.

"Liquidating inventories is one phase of the cattle cycle, a 10- to 12-year pattern of expanding and contracting cattle numbers driven by changes in producer profitability and worsened by drought," said James Mitchell, an extension agricultural economist who focuses on livestock for the University of Arkansas System Division of Agriculture. "The impacts of historically tight cattle numbers are being felt at every stage of the beef supply chain."

Arkansas ranks 11th in beef cow production, according to the Arkansas Beef Council. Beef cows contribute about US$500 million to the state's economy each year. There are an estimated 1.57 million beef cows in the state, and there are about 20,000 cattle operations in the state.

A number of factors have coalesced to push beef prices higher. Drought has impacted many beef cow-producing states during the last several years, and it has led to less hay production. Other input costs have surged forcing producers to reduce herd numbers.

Using US Bureau of Labor Statistics, the Fryar Center Risk Management Center noted that retail beef prices averaged US$8.56 per pound through August 2025, up 60-cents per pound from the same period last year. On average, beef, per pound, is four times more expensive than chicken during the past two years. Domestic protein demand remains relatively strong, and poultry stands to gain more ground against beef and pork, the report stated.

"Understandably, these higher prices have renewed concerns about consumer demand," Mitchell said. "There is some evidence that beef has lost price competitiveness in 2025."

Even though market fundamentals suggest there are incentives to begin rebuilding the US cow herd, the signals for expansion through heifer retention remain muted, Mitchell said.

Followed by a fourth-quarter slide of 19%, beef cow slaughter in 2025 was down by 17%. Mitchell said the slaughter totals alone are "slaughter relative to the size of the beef cow inventory." And relative to January 1 beef cow inventories, Mitchell said the nation is on pace for beef cow and heifer slaughter to equal about 42% of the beef cow herd.

"Historically, based on this model, this rate would need to fall below 40% before we would expect a year-over-year increase in beef cow inventories," Mitchell said. "Heifer retention is the key to longer term cattle and beef supply expansion and that is a multi-year process."

It typically takes about two years to repopulate a herd. Structural constraints, input costs, and financial considerations will also likely delay a broad-based recovery in beef cow numbers, he added. The herd rebuild, when it does occur, will be "slow and intentional, supporting cattle prices through 2027-2028."

The Fryar Center Markets in Review reported that Arkansas steer prices for 500-to-600-pound calves have averaged US$371 per hundredweight year-to-date through November, up 29% from the same period in 2024 and more than double the 2019-2023 average. Arkansas feeder cattle prices for 700-to-800 pounders saw a 32% increase from last year, averaging $314 per hundredweight.

Nationally, cattle on feed to be slaughtered have averaged about 11.4 million head through September, a 1.4% drop compared to 2024 over the same period.

"Despite longer days on feed and record dressed weights, tighter cattle supplies are affecting the number of cattle placed on feed and those leaving feedlots," Mitchell said.

The cattle harvest, or fed cattle slaughter, in 2025 has averaged 6.1% lower compared to 2024. Together, these trends have contributed to lower beef production, Mitchell said. The most recent World Agricultural Supply and Demand Estimates from the US Department of Agriculture forecast 2025 beef production at 25.8 billion pounds, or 1.2 billion pounds below 2024 production.

One of the biggest factors to watch in the cattle market for Mitchell called "policy uncertainty."

"We've already seen how sensitive cattle markets are to it," he said.

For example, even though most analysts agreed that an increase in beef imports from Argentina and reopening the US-Mexico border livestock trade would not meaningfully change beef or cattle market fundamentals, the announcements still triggered a three-week selloff in cattle markets, Mitchell said.

The US-Mexico border was first closed to live animal trade in November 2024 following a detection of New World Screwworm in Mexico and has been mostly closed since then. Between February and May 2025, when the border was briefly open, weekly feeder cattle imports from Mexico averaged 14,900 head — about 43% lower than the 2020-2024 weekly average.

With the border still closed to livestock trade due to New World Screwworm concerns, Mitchell said even if an agreement were reached, "a phased reopening would somewhat limit any increase in supply that could disrupt US cattle markets." Since many of the cattle that would have been exported while the border was closed have already likely entered other marketing channels, Mitchell said there is little evidence of a significant backlog of Mexican cattle awaiting import.

Also, the proposed increase to quadruple imports from Argentina to about 132 million pounds would account for less than 1% of US demand, Mitchell said.

With low domestic production and historically low cattle numbers, the US has been importing larger-than-normal volumes of beef. The September World Agricultural Supply and Demand Estimates showed 2025 US beef imports at 5.4 billion pounds, or about 18.4% of total US beef consumption, use, and loss, Mitchell said.

"It is important to recognise that 'beef' is not a single product but a diverse portfolio of products serving different market segments," Mitchell said. "The US imports primarily lean manufacturing beef used in ground beef production, while the domestic industry produces a larger share of grain-fed, high-quality cuts."

- Talk Business & Politics

US beef prices rose by 15% last year as cattle inventories shrunk

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