A few thoughts by John Nalivka: Beef industry prices – the market is working
Beef prices are high and the market is working – perhaps, the best it ever has from the cattlemen’s perspective.
In an interview this week, the Secretary of Agriculture outlined the USDA’s “multi-step plan” to bring down beef prices including; 1) releasing 5 million acres of Federal land for ranchers to lease, 2) implementing programs for young ranchers to get loans, 3) working with the Make America Healthy Again movement, 4) opening new, smaller, processing plants to promote Beef Made in America, and 5) “Buying a Larger Quota of Beef from Argentina.” In that same interview, she also indicated that prices should come down in the spring of 2026 and at least during the second half of the year. Though I understand the politics of consumer prices, those politics are currently inconsistent with the economics of the cattle industry, particularly when U.S. consumer beef demand has been a significant driver to beef prices.
I disagree with both the USDA’s multi-step plan and their assessment of when beef prices will come down. I am not alone in making that statement. Cattle numbers will continue to decline into 2026 unless there was a considerable number of heifers held as replacements from the 2023 calf crop and bred in 2024 to calve this year (2025). That is not the situation if USDA’s January 1 Cattle Inventory, Monthly Cattle on Feed reports, and Cattle Slaughter reports were correct. Aside from the reports, I did not hear any conversation amongst cattlemen that they were retaining and breeding heifers to build herds during 2024.
A review of heifer slaughter shows that through the first week of November, it was down 6 percent from a year ago, but a better comparison might be for 2014 when cattlemen were expanding herds during the previous cattle cycle. That year, herd rebuilding began after 8 years of liquidation. Heifer slaughter through the first week of November this year was up 10 percent over that same period in 2014. For all of 2014, during herd rebuilding, the industry slaughtered 10 percent fewer heifers than during 2013 and the cattle inventory grew 1 percent from the beginning of 2013 to the beginning of 2014. Though heifer slaughter this year is down 6 percent from 2024, I do not believe we will see increased cattle numbers for January 2026. Cattlemen did not begin to rebuild herds during 2024. I expect the initial steps of herd rebuilding will begin slowly this year with an increased number of heifers held as replacements from this year’s calf crop. This herd building scenario will pull down the number of heifers on feed into 2026.
Regarding beef prices, I continue to emphasize that the outlook will be largely dependent upon consumer demand. Regardless of how much supply drops, if consumers are unwilling or unable to pay higher prices, the market will not be sustained.
