From drought memories to high interest rates, beef producers today are hesitant to rebuild even with record cow-calf profits. Structural risks are outweighing the immediate price signal.
Patrick Linnell, CattleFax director of market research, frames today’s beef market as a familiar cattle cycle operating under new structural conditions. Linnell was the featured guest in “The Future of Beef Show” podcast episode 17.
He shares the idea that history doesn’t repeat itself, but it does rhyme, summarizing cycles still exist, numbers will eventually grow and prices will come down from today’s highs, but the underlying drivers and constraints are different from past decades.
Despite record cow‑calf profits, herd expansion is being slowed by structural headwinds and risk aversion. The industry is planting the seeds of expansion, but the rebuild will be slow and cautious.
Debating the decision of selling or keeping high-priced replacements, Linnell summarizes: “Whether somebody’s looking at retaining that heifer calf or selling her, honestly, it’s hard to argue with either decision.”
Regarding herd size, he predicts 30 million beef cows as likely the upper end of what’s realistically achievable, and only on a long timeline — possibly around 2030 to 2032. He says land coming out of beef production and other constraints cap the upside. Yet the industry has offset some of this land and herd reduction by producing more beef per animal, largely through rising carcass weights.
Bottom line: Linnell points to aging operators and succession uncertainty, labor shortages and high labor costs, high capital and interest rates, alternative land uses and urban sprawl, and memories of drought that push many to sell versus build. Layered on top is greater market volatility as well as policy and social media shocks, which make many producers unwilling to commit to expansion right now.
Here are four takeaways from the podcast:
1. High Prices Are Demand-Driven, Not Just About Short Cattle Numbers
Today’s strong prices reflect exceptional beef demand as much as, or more than, tight supplies.
Linnell notes U.S. beef production is still historically large, roughly around a 25‑year average, and per capita beef consumption has increased, reaching its highest level since about 2010 at just more than 59 lb. per person. Consumers are not eating less beef; instead, they’re paying more because they want the product.
Looking ahead, Linnell expects demand to flatten rather than keep climbing steeply from here. With retail beef prices around $9.50 per pound, he thinks many consumers are at a point where they will continue to pay current levels but are resistant to going significantly higher. Over the long term, he still sees an upward trend in beef demand, but near term, he anticipates a plateau. A severe recession would be the clear downside risk to this picture.
2. Structural Shift: More Beef from Fewer Cows Through Genetics and Carcass Weights
With land and cow numbers constrained, growth is coming from heavier, more efficient carcasses — but that also creates new challenges.
“We’ve been able to just produce more with less, too,” Linnell says. “And that really comes back to how big carcass weights have become.”
Linnell says he doubts carcass weights will decrease significantly. While cheap corn supports feeding cattle to heavier weights, he concedes corn won’t stay this inexpensive forever.
He summarizes today’s heavy carcasses are only possible because of decades of genetic progress. Through continual investment in better bulls, cow‑calf producers have dramatically increased the animals’ genetic potential for growth and carcass performance.
In his view, cattle feeders are simply realizing genetic potential, and any policy or management shifts going forward, will have to balance cow size, forage efficiency and carcass performance.
3. Trade and Trim: Why Imports Are Critical in a High-Demand, Heavy-Carcass World
Heavy carcasses in the U.S. generate fat trim, which must be blended with lean beef from imports to make products like 90/10 ground beef. With ground beef demand also very strong, Linnell sees imports as necessary to satisfy consumer preferences.
At the same time, he expects global beef demand to grow over the next decades, meaning more competition for that lean product worldwide.
4. Outlook: Strong-but-Softer Calf Market, Plus Faster, More Volatile Markets in General
Linnell predicts continued strength in calf prices — likely below last year’s highs, but still near record levels.
“[There is a] very strong likelihood that we are looking at calf prices that are probably below year-ago levels this coming year,” he says, “But it’s still the second-strongest calf market on record.”
He cautions the reopening the U.S. border to Mexican cattle could pull prices down a notch.
On technology, Linnell sees artificial intelligence (AI) as a useful support tool — a great editor and helper — but not something that can yet write a credible forward‑looking market report.
He explains AI is inherently backward‑looking and struggles with regime changes or new normals. For CattleFax, he says the value remains in human synthesis of data, market structure and producer feedback.
Linnell also connects AI and algorithmic trading to the increasing speed and volatility of financial and commodity markets. Markets may end up in the same place eventually, but price moves now happen faster and more violently, complicating hedging and risk management.
Overall, Linnell’s view is the outlook for cow‑calf producers remains historically strong, even with the downside risks from policy, trade and macroeconomic shifts.
