Cattle Market Transparency

What Illinois Beef Producers Need to Know

By Sara McClendon

Beef cattle producers entered 2025 with optimism, thanks to record breaking prices. Strong demand from consumers combined with an increase in cattle prices has 2025 shaping up to be a record year for producers in Illinois and across the country. However, as any producer knows, the beef industry is a complex landscape. There are many factors that ultimately influence the market and each producer’s bottom line. Here’s a breakdown of what’s happening in the market, the factors that influence it, and what to keep an eye on the second half of 2025.

Market Trends

Record prices across sectors set the tone for 2025. In late March, Maggie Malson reported in Drovers that the breakeven price is about $170/cwt, while fully grown cattle are selling for about $212/cwt. However, the cost to raise new cattle is also higher, around $200/cwt. Feeder cattle prices have also increased from $240/cwt last August to $287 now. Today’s market conditions come down to high demand with the lowest inventory in 64 years.

In January, the USDA’s annual Cattle Inventory Report showed a one percent decline from 2024 in beef cattle inventory, which is at 27.9 million head. In April 2025, Tom Doran of Agrinews reported that inventory remained low. While the overall decline did slow some, and this year’s calf crop was strong, there is not much incentive for producers to retain heifers for breeding due to strong feeder prices. Producers are not replacing heifers, and instead are looking to mitigate risk of a potentially volatile future markets by moving on advantageous pricing now.

Additionally, industry efforts to build beef demand with consumers continues to pay off. Americans are buying more beef, with a 6.7 percent increase in retail meat spending, as reported by Nevil Speer in Beef Magazine.

Cow-Calf Operations See Stand-Out Prices

Cow-calf operations are seeing some of the best margins in recent memory. Heifer retention continues to decline since 2021. With bred heifer numbers mostly set for the year, the key variable to watch in the second half of 2025 is beef cow culling, as Derrell S. Peel, livestock marketing specialist, outlines in a February 2025 report for Oklahoma State University Extension. Cow slaughter rates would need to drop by 12 percent in 2025 to fall below the nine percent culling threshold seen during previous expansions.

Potential Downsides of High Prices

Not every sector of the industry is cashing in. For example, as Malson outlines in her Drovers article, the selling price for meat packers is not high enough to balance rising costs. While the average beef price is about $327/cwt, up from $316 last year, it doesn’t cover the higher price packers are paying for beef.

Additionally, stocker operations are also under pressure, as Peel outlines in a March 2025 article for Drovers. With fewer feeder cattle available, and calf prices sky-high, ranchers are leaning toward selling early. Feedlots, facing low feeding costs, are eager to buy earlier as well, shrinking the stocker window. Still, there’s a silver lining: If producers begin retaining more heifers for herd rebuilding, it could create new opportunities for stocker operations to fill the gap in the supply chain.

Economic Factors Influence the Current Supply and Demand Dynamic

Most in the industry can easily point to higher input costs, labor issues, interest rates, and a lot of uncertainty in regards to global trade as key factors shaping this year’s market dynamics. Feed, fuel, fertilizer and other inputs have all gone up, which eat into profit margins and highlight the need for risk management decisions. Labor shortages across the ag industry continue to be a challenge. Plus, higher interest rates make financing equipment, herd expansion and overall operating costs more expensive.

Global Trade and Tariffs Remain a Mixed Bag

With the impact of tariffs still largely being unknown, international trade is certainly an ever-changing factor every producer is monitoring. Malson reports in a March 6 article for Drovers that it might initially seem like tariffs would support U.S. beef prices. However, the impact could potentially be offset by retaliatory tariffs. If tariffs or trade shifts increase pork and poultry into the U.S. market, beef might see downward pressure from increased competition for protein sources.

Advocating for Key Policy and Regulatory Issues

NCBA advocates for opening new international trade markets and reducing restrictive tariffs. While the domestic market for beef is strong, exports account for $400 value per head of cattle. The ability to sell cuts that are less popular in the U.S. but highly valued in the other countries—like liver, heart and intestines—are key to maintaining success for American beef producers.

This year NCBA members testified to Congress in support of a strong Farm Bill for several critical programs, including Livestock Risk Protection, Livestock Indemnity Program, and Livestock Forage Program, all of which help producers manage disasters, volatile markets while remaining good stewards of the land. Additionally, NCBA advocates for disease prevention through programs like National Animal Disease Preparedness and Response Program, which helps universities and ag organizations work to prevent outbreaks. Finally, tax relief for farm families is another way NCBA seeks to improve profitability for beef producers.

Environmental and Health Concerns

While there are many new factors that have emerged this year, the environment and cattle health remain challenges that beef producers are all too familiar with. Drought, floods and extreme weather events challenge the industry from pasture conditions, to feed costs and transportation.

In late 2024, a New World Screwworm outbreak in Mexico caused the U.S. to temporarily close the border to Mexican cattle imports, leading to a spike in live and feeder cattle prices. When the border reopened in February 2025 under stricter safety guidelines, prices dipped slightly but remained higher than pre-outbreak levels.

Looking to the Future

With a strong start to the year for Illinois beef producers, 2025 remains positive. The remainder of the year comes down to a complex mix of supply dynamic, policy decisions, and economic impacts. Tight inventory and continued high demand suggest that prices will remain favorable. However, beyond this year, rebuilding herds, managing input costs and navigating challenges like labor shortages remain potential obstacles for producers. With uncertainty becoming the norm, producers can start to plan ahead by looking across the supply chain and working with partners to prepare proactively. Considering additional inventory and working with veterinarians, nutritionists and other partners to secure necessary supplies when it makes financial sense could help producers capitalize on the strong market this year. In the end, the choices producers make today will continue to influence their operation far into the future.