By RHIANNON BRANCH

FarmWeek

Livestock markets in 2025 have been more favorable than in recent years compared to crop markets, but a high price environment does not mean producers should ease up on risk management.

Brittney Goodrich, assistant professor of ag economics at the University of Illinois, points to the cattle industry where several years of drought have drastically cut domestic beef supplies and border closures due to New World Screwworm have interfered with imports, pushing prices higher.

“During this last year, we haven’t decreased the herd size as much as we had previously. We’ve also not slaughtered as high of a percentage of cows and heifers as we had in previous years. So, there may be some modest indications that we’re starting to think about expansion, but it’s going to be slow,” Goodrich told FarmWeek. “USDA projects no real significant expansion until between 2026 and 2027, then we might start to see herd sizes increase, which would put downward pressure on feeder and fed cattle prices.”

USDA reported an estimated 11.7 million head of cattle on feed as of Dec. 1, down 2 percent from last year. Placements in feedlots (1.6 million head) declined 11 percent while marketings of fed cattle (1.52 million head) were down 12 percent from a year ago.

Despite slow progress to rebuild the U.S. cattle herd, beef markets experienced some downward price movements this year and recently fell from the peaks seen in September.

“I think that was just a seasonal thing that we kind of expected to happen, it was just much more drastic than we’re used to seeing,” Goodrich said. “But that’s kind of highlighting that even in these relatively good times, there can be huge price swings that we need to be prepared for.”

Goodrich said all livestock producers should keep in mind even in times of high prices there is downside price risk.

“Things like knowing your cost of production and hedging, if you’re large enough in futures and options markets, can be good tools to use,” she said. “There’s also a relatively new risk management tool provided by USDA that is basically a subsidized option for hogs, feeder cattle and fed cattle. Folks can use that to protect against some of that downside price movement if they’re not big enough to be a player in the futures and options markets.”

Livestock producers should continue to monitor the situation with New World Screwworm into 2026.

“If they open live cattle imports back up from Mexico, that may put some downward pressure on our beef prices here in the U.S., particularly on the feeder and fed cattle side,” she said.

Goodrich shared her livestock market outlook during the Illinois Farm Economics Summits held Dec. 16-17 in DeKalb, Peoria and Mt. Vernon.

This story was distributed through a cooperative project between the Illinois Farm Bureau and Illinois Press Association. For more food and farming news, visit FarmWeekNow.com.