Though beef futures plunged on weekend news about Tyson’s plans to close a Nebraska meat processing plant and reduce force at a Texas operation, Terrain’s Dave Weaber expects such a drop to be short lived.
Meat processing realignment, however, will likely continue as packers struggle to find profit, Weaber says, noting those companies so far only show six profitable weeks out of the first 47 of 2025.
“We've seen definitive pullback in slaughter rates for fed cattle and cow slaughter. We're down about 32,000 head a week on average compared to last year,” Weaber says, noting such declines make plants inefficient and increase overhead costs. So, he says, packers are “in a tight spot and something had to give”
Market fundamentals are sound
Despite futures market volatility following closure announcements, Weaber notes that the supply of fed cattle didn’t change over the weekend.
The initial response to Tyson’s news was more emotional than logical, Weaber says on this week’s episode of Ag Marketing IQ In Depth.
“We've got a hiccup here, but we're still $20 or $30 dollars a hundred weight above where we were a year ago,” Weaber says. “I think this thing will rebound. There's been no definitive hit to beef demand."
And a significant step toward a larger herd–the shift in supply that could pressure prices down – is even less likely now. Here’s why:
- The national conversation alleging price fixing by the four leading meat processors injects uncertainty into the market–and creates risk for cattle producers.
- Consumer demand remains strong.
“We're going to continue to be short of cattle, all of 2026 and probably a big chunk of 2027,” Weaber says. “If demand stays where it's at, supply gets smaller. Econ 101 says prices have to go higher and we're going to ration that use of beef at the consumer level, cattle at the packer level, stockers at the feed yard level, and calves going into the stocker operations. We're going to ration all of that.”
High beef prices likely continue
If something changes, and ranchers decide to expand the herd, the cattle herd is a big ship that makes a slow turn.
“The cow-calf guy is going to have to finally say, ‘I'm willing to invest in a cow and keep a heifer out of the system.’ And that gives us a whole ‘nother leg of shorter supplies and higher prices,” Weaber explains. "It's a three-year process from if we kept a replacement heifer this fall to when we get her first calf through a feed year. That biology is the biology."
Essentially, cattle producers who focus on risk management through futures options or Livestock Risk Protection can continue to ride the wave in this long-lasting high-price cycle.
To hear more on the cattle market and this moment in livestock’s economic cycle, watch this week’s episode of Ag Marketing IQ In Depth.