Editor’s note: The following was written by Lee Schulz, Iowa State University Extension livestock marketing specialist, for the May Ag Decision Maker newsletter.
Niels Bohr, Nobel Prize winner in physics, said, “Prediction is very difficult, especially if it’s about the future.” He’s correct. But that shouldn’t stop us from trying.
Even though predictions may well turn out wrong, the act of forecasting has value in itself. Envisioning the future helps develop a plan. The earlier you develop a plan, the better.
However, the farther into the future you look, the less reliable forecasts are. That makes contingency planning important.
On May 12, 2023, the USDA released its first forecast of 2024 beef supply and use in its monthly World Agricultural Supply and Demand Estimates report. That report projected total supply for 2024 at 29.043 billion pounds, including beginning stocks of 670 million pounds, total production of 24.813 billion pounds and imports of 3.560 billion pounds.
The May 2023 report had 2024 beef production down 8.1% compared to 2023. USDA’s July 12, 2023, forecast for 2024 beef production declined further to down 9.0%.
Subsequent forecasts rose steadily. The USDA’s May 10, 2024, WASDE forecast 2024 beef production down only 1.4% from 2023. Why?
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Heifers earlier thought to be replacements are going into feedlots. Beef cow slaughter is higher than previously projected. Dressed weights are tipping the scales heavier. All boost beef production.
Further adding to supplies is beef imports rising faster than expected and exports lagging earlier projections.
While 2024 beef production and supply have exceeded forecasts, prices have also risen. In May 2023, USDA forecast first-quarter 2024 slaughter steer prices (5-Area, direct, total all grades) at $175/cwt. This would have been $14.10/cwt or 8.8% higher than in the first quarter of 2023.
First quarter 2024 prices averaged $181.03/cwt. This was $20.11/cwt or 12.5% higher than 2023’s first quarter. Selling more volume at higher prices signifies rising demand.
What’s the outlook for 2025?
On May 10, 2024, USDA released its first forecast for 2025. Beef production is projected at 25.187 billion pounds, down 5.5% from the current 2024 forecast of 26.662 billion pounds. Beef exports are expected to be 2.5 billion pounds which would be down a whopping 11.3% from 2024’s forecast of 2.818 billion pounds.
USDA forecasts 2025 beef imports at 4.225 billion pounds, up 1.3% from the 4.171 billion pound estimate for 2024.
Lower beef supply in 2025 will lead to a reduction in domestic per capita beef use to 55.6 pounds per person on a retail-weight basis. This would be down 2.7 pounds or 4.6% from 2024. USDA is expecting 2025 slaughter steer prices to rise to $188/cwt, up 2.4% from the current forecast for 2024 of $183.51/cwt.
Beef supply and use projections for both 2024 and 2025 will change. USDA re-forecasts each month to reflect new information and changing conditions. This is how USDA’s forecasting success should be measured. Not by achieving 100% accuracy, but by how well they reflect changing market fundamentals.
