A monthly column written for Beef Central by US meat and livestock market commentator, Steve Kay, publisher of US Cattle Buyers Weekly

IT has been a dramatic start to the year for the United States beef industry.

Cattle feeders enjoyed new record high prices for grainfed cattle the first five weeks of the year. Then they and everyone else in US agriculture held their breath as President Trump imposed and then delayed for 30 days the implementation of punishing tariffs on Canadian and Mexican goods.

On 1 February President Trump announced 25 percent tariffs on all imports from Canada and Mexico and 10pc additional tariffs on imports from China.

Canada and Mexico initially retaliated by imposing tariffs on a wide range of US goods entering the two countries. But these were then delayed as well. Both countries said they discussed with President Trump about increased border security and countering drug trafficking.

The White House had said it was implementing the tariffs to stem the flow of migration and fentanyl into the US The new tariffs on China took effect last Tuesday.

Canada initially imposed tariffs on US$30 billion worth of American goods, followed by US$125b worth of other American products later on.

Its tariffs provided insight into what Canada might still target. Its list included meat, poultry, eggs, dairy products, dairy ingredients, honey, tomatoes, legumes, nuts, fruit, coffee, tea, spices, grain-based commodities like wheat, rye, barley, oats, canola and rice, margarine, processed meats, sugar, molasses, chocolate, malt extract and sauces.

The Mexican government did not provide a specific list of US products subject to tariffs but its plan included a focus on US goods from “Republican strongholds.”

The record live cattle prices saw them surpass $200 per cwt live the second week of the year. Several factors caused the price surge. Packers appeared to be light on their purchases despite two holiday-shortened production weeks and were forced to pay higher prices despite negative operating margins.

Extremely cold weather was also a factor, as cattle feeders chose to hold back cattle to add weight back until the weather improved.

Smallest herd since 1951

Meanwhile, USDA’s annual cattle inventory report published on January 31 showed that the US total cattle inventory fell slightly in 2024 from 2023 and remains the smallest total since 1951.

USDA reported a January 1 total herd of 86.662 million head, which was down 0.6pc from the 2023 total of 87.175m. The big difference between 1951 and this year is that beef production then totaled 8.1 billion pounds (3.68 million tonnes). Beef production this year is estimated to be 25.9 billion pounds (11.7 million tonnes).

Give credit to the best beef producers in the world, says prominent analyst Andrew Gottschalk, from HedgersEdge.com.

The report showed that the number of beef cows on January 1 was 27.9 million head, down 1pc on 2023. The number of beef cow replacements (heifers held back for herd rebuilding) was 4.67 million head, down 1pc.

This meant that herd rebuilding did not begin in 2024 and that the beef industry experienced its fifth year of herd liquidation.

USDA estimated the 2024 calf crop at 33.5 million head, down slightly from the previous year’s calf crop. Calves born during the first half of 2024 were estimated at 24.6 million head, down slightly from the first half of 2023. Calves born during the second half of 2024 were estimated at 8.93 million head, 27pc of the total 2024 calf crop.

Cattle and calves on feed for the slaughter market in the US for all feedlots totaled 14.3 million head on January 1, 2025. The inventory is down 1 percent from the January 2024 total of 14.4 million.

Cattle on feed in feedlots with capacity of 1000 or more head accounted for 82.7pc of the total cattle on feed on January 1, 2025, up slightly from the previous year. The combined total of calves under 500 pounds and other heifers and steers over 500 pounds outside of feedlots at 24.6 million head, was slightly below January 2024

Steer and heifer slaughter in 2024 was the only slaughter category to show a year-on-year increase, said USDA in another report.

Beef cow slaughter had the largest year-on-year decline, followed by dairy cows and bulls. Examining heifer, beef cow and dairy cow slaughter as a percentage of total slaughter offers an indication of producer intentions for maintaining or growing their herds in the coming year, said USDA’s Economic Research Service in its latest monthly Livestock, Dairy and Poultry Outlook report.

As a proportion of total slaughter, heifer and cow slaughter declined by almost two percentage points from 2023, says ERS. However, it remained the third highest share over the last 25 years. A year ago, hay prices for 2024 were expected to decline as forage supplies grew. As a result, calf prices were expected to rise to improve producers’ operating margins and support their willingness to retain heifers and cows, said ERS.