Livestock Prices Surge: Experts Urge Caution on Risk Management

Livestock markets are showing more favorable conditions in 2025 compared to recent years, particularly when juxtaposed with crop markets. Despite the positive trend in prices, experts emphasize the necessity of maintaining robust risk management practices. Brittney Goodrich, an assistant professor of agricultural economics at the University of Illinois, highlights the complexities facing the cattle industry, where prolonged droughts have significantly reduced domestic beef supplies. Additionally, border closures due to the New World Screwworm have hampered imports, contributing to the surge in prices.

Goodrich remarked, “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.” The United States Department of Agriculture (USDA) projects that substantial expansion of the cattle herd is unlikely until between 2026 and 2027, which could eventually exert downward pressure on both feeder and fed cattle prices.

As of December 1, 2025, USDA reported an estimated 11.7 million head of cattle on feed, reflecting a 2% decline from the previous year. Furthermore, placements in feedlots decreased by 11% to 1.6 million head, while marketings of fed cattle fell by 12% to 1.52 million head compared to a year prior.

Despite the slow recovery of the U.S. cattle herd, recent beef market trends indicate some downward price adjustments, particularly after reaching peaks in September. Goodrich observed, “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.” She cautioned that even in times of elevated prices, significant price fluctuations can occur, necessitating preparedness among producers.

Goodrich advises livestock producers to remain vigilant regarding the potential for downside price risks, even amidst favorable market conditions. “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 noted. For those who may not have the capacity to engage in futures and options, a new risk management tool offered by USDA presents a subsidized option for hogs, feeder cattle, and fed cattle, providing a buffer against adverse price movements.

Producers should continue to monitor the implications of the New World Screwworm situation into 2026. Goodrich explained, “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.”

Goodrich presented her insights during the Illinois Farm Economics Summits, which took place in DeKalb, Peoria, and Mt. Vernon from December 16 to 17, 2025. This information was disseminated through a collaborative effort between the Illinois Farm Bureau and the Illinois Press Association. For more updates on agriculture and livestock markets, visit FarmWeekNow.com.