Cattle producers are seeing a strong 2025 in what could be a good year to see prices rise and cattle herds repopulate following years of harsh conditions.
That was the focus of a recent look that Farm Credit Canada took for the cattle industry in Canada and what it has to contend with in 2025.
Leigh Anderson, a senior economist with the FCC, talks about his optimism for the industry for the year.
"In general, finding the cattle outlook very positive coming off of some very strong prices that we've been seeing recently driven by really a small North American cattle herd."
The prices have been rising due to a reduction in herd size which came about thanks to droughts in the early 2020's, with Anderson saying he expects to see those come back in the near future.
"Maybe in the next couple of years. We still don't have the numbers to show that it is rebuilding, but I have heard of producers starting to retain more replacement heifers going forward. So positive news there is that maybe we'll start to see that in the next couple of years of it turning around. Profitability and prices remaining very high are supportive of that."
A part of trade having a big impact on trade and the economy is potential tariffs between Canada and the US, with an effect likely for the cattle market.
"It will impact Canadian cattle prices, the North American market is so integrated that cattle move back and forth across the border. Whether we export feeder calves South of the border to be fed and slaughtered in the US or vice versa, it does impact. Our prices here in Canada trend very closely to US features, the difference between that futures price and cash price here in Canada, we call a basis. So we would expect that basis to widen, which ultimately lower Canadian cattle prices slightly going forward if tariffs are applied."
Supply could also be impacted with that having an effect on prices as well.
Anderson says that overall there are three factors people should keep an eye on in 2025, one of which is consumer resiliency in the beef market.
"One thing that we're really seeing right now that the high record cattle prices across North America is the consumer has been really resilient in. They're still purchasing and consuming beef even at these high retail prices. Now will that continue to to last? Do consumers, I guess, have a tipping point? At what point do they start consuming less beef or eating other protein substitutes?"
"Other trends to monitor in 2025, of course, is the value of the Canadian dollar. So any depreciation in the dollar will provide a boost to Canadian prices received up in Canada, but it can also boost the cost of feed grains. So that's where the impact of a tariff can be a little hard to predict because it changes the calculation tremendously."
"The other trend to monitor for 2025 is voluntary country of origin labelling. It's not going to take effect in the US until January 1st, 2026, but you could see the US cattle industry and slaughter industry start to adjust the way they're gonna be sourcing cattle prior to that date."
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