U.S. Beef Attracts More Customers Than It Can Handle

Brian Earnest

August 25, 2025

Key points

• Protein’s popularity and the improved quality of U.S. beef from cattle genetic enhancements are helping drive beef demand.
• Beef cattle herd expansion is stymied by drought, aging ranchers, rising calf prices and border issues with Mexico.
• High demand and low supply have pushed all-fresh retail beef prices up to a record $8.90 per pound.
• Beef demand remains strong, as some consumers opt for lower-cost beef cuts over cheaper non-beef alternatives.
• The U.S. cattle inventory hit a 75-year low in mid-2025, suggesting supply constraints will continue through 2026 or 2027.

Record high beef prices are getting a lot of attention, and the argument can be made that extraordinary demand is the key driver. The COVID-19 pandemic helped lead us to a place where “leveling up” through access to luxury goods is prioritized over luxury services. And beef, specifically high-quality beef, is a luxury good that can be accessed for at-home consumption at a fraction of the cost of fine dining establishments, with a potentially better eating experience.

The American consumer’s access to affordable high-quality beef rivals that of any other nation. Retail per capita beef consumption is headed for 60 pounds this year, and 87% of production is Choice grade or higher. But this has not always been the case. For the first time since 1988, the volume of U.S. Prime graded beef produced in March-May exceeded the volume of Select.

The U.S. beef industry is producing a much different and higher quality product today than 30 years ago. This is largely due to cattle producers in the 1980s-90s recognizing quality issues in the genetic makeup of the herd. Since then, the industry has been selectively making improvements to produce carcasses with higher fat marbling for exceptional palatability. For example, programs like Certified Angus that reward quality have boosted overall meat performance.

Building out a herd on the range is complicated

At the same time, a combination of weak forage conditions after several years of successive drought has yielded extremely difficult conditions for the nation’s cattle ranchers. It is worth mentioning that the average age of the cattle rancher is 58 years old. In short, we are not making enough new ranchers, nor do current ranchers have adequate access to well-conditioned pastureland to raise more cattle.

Another challenge in herd building is the price of day-old calves, which set a new record over $400 per cwt in the summer. With calf prices so high, heifer retention for breeding purposes has suffered and fewer beef cows have been culled. In addition, the discovery of New World Screwworm in cattle in Mexico further exacerbated tight feeder cattle supplies, as half of all imported U.S. cattle come across the southern border. For context, imported cattle account for about 3% of U.S. supply.

Beef demand remains exceptional

The consumer perception of the health benefits of eating beef has in recent times improved as well. Where red meat was once demonized as an artery clogger, beef is now on a pedestal for fitness-conscious consumers who laud protein content for muscle production. It seems the U.S. consumer cannot get enough animal protein these days, and beef remains king.

While demand remains strong, rising prices for beef cuts and steak type items are pushing beef-loyal consumers to trade down to lower-tier beef items, like a chuck roast or grinds instead of a ribeye, filet, or other pricier steak items. This consumer pressure on ground beef supply has contributed to tighter availability and interest from other top producing nations.

Strong beef demand is a global phenomenon

As U.S. consumer beef demand has outstripped supply, these systems are more heavily reliant on global beef and cattle supplies. Prices in the global marketplace have adjusted accordingly and continue rising in tandem. The Food and Agriculture Organization bovine meat index (2014-2016=100) reached an all-time record of 141.2 during August, a 2.5% increase month-over-month, and a 12.5% increase YoY.

The Tariff Rate Quota (TRQ) for “other nations” opens on the first of every year, and in 2025 the “other nation” quota was filled in just 17 days, with Brazil providing the bulk of shipments. Following the fulfillment of the TRQ, a 26.4% tariff is levied on U.S. beef imports from Brazil. Even with this tariff added, Brazil beef remained competitive in U.S., due to exceptional demand. However, as global markets adjusted, imports were on the decline and the new 50% tariff will further soften Brazilian beef’s competitive advantage in U.S. markets.

Tight cattle supplies are boosting values

Cattle prices were at historic highs to start 2025 and have only continued higher through mid-year. Although pasture conditions have seen some improvement throughout the bulk of the heavy cattle producing U.S. regions, economics still favor further contraction of the nation’s cattle supply.

So, it was no surprise that the USDA mid-year cattle inventory report released on July 25 revealed that U.S. total cattle inventory, beef cow inventory and calf crop inventories were all down 1% from 2023 (the most recent mid-year report). At 94.2 million head, the biannual cattle inventory was the lowest mid-year count on record (a 75-year low).

The percentage of heifers on feed can be used as an indication of retention. Most analysts point to a long-term average of around 37% as a baseline indicator. However, an increasing number of beef-crossed dairy animals entering feedlots may provide as much as a 2%-3% variance. The latest U.S. Cattle on Feed report showed 38.1% of feedlot inventories were heifers, up from April’s 37.6% but down from 39.4% a year ago.

In addition to dampened availability of cattle from traditional beef production, cumulative 2025 cow slaughter is down about 12% YoY and 24% below the five-year average. After running well above the historical average for several years, capacity utilization has declined significantly over the last 18 months and fell to just 77% in the last week of July (60% for cow plants). Saturday kills have been nearly non-existent.

Bottom line, the fundamentals have firmly driven the market to the point where it is today. Twelve months ago, there was a question whether beef demand would hold up at higher prices, but today most analysts are fairly certain that beef value risk is to the upside.