Teamwork and communication up and down the supply chain is important in today’s beef industry.
“Especially in the beef industry where the prices are getting as extreme as they are and the risks are getting high, we find ourselves working together a lot more than we find ourselves competing,” says Lance Zimmerman, senior beef industry analyst with RaboResearch Food & Agribusiness.
Zimmerman emphasized this idea during the K-State Beef Stocker Field Day on Sept. 25 in Manhattan, Kan. He was on an industry panel with Glynn Tonsor, K-State ag economist, and moderated by Wes Ishmael, Hereford World executive editor. The trio discussed short-and long-term trends of the beef industry, where the industry is headed and what producers need to be aware of.
Production Forecasts
For producers, understanding trends is essential. Tonsor says projections for 2026 predict there will be a 5% reduction in commercial harvest. Beef production is projected to fall 3% to 3.5% in 2025 and another 4% in 2026. He says the downward pressure on supply boils down to two factors: hoof count and dress weights.
He stresses with prices like the market has experienced, it is difficult to make decisions on when to expand the herd or when to sell calves. Because of this, there is a continued decrease in the number of cows, therefore, fewer calves produced for beef products.
To aid in making decisions, Tonsor recommends using BeefBasis.com, a resource used for projecting value of gain with feeder cattle. Using this and other projected data, Tonsor predicts net values on return for finishing steers in Kansas feedyards. In his example, with all factors the same, for a finished steer in September 2025, the net return is estimated at $700, but in March of 2026 it is an estimated loss of $256.
According to Tonsor the main difference in these numbers is the initial price paid for the calf. He adds while rising supply prices challenge producers, the beef industry must also appreciate how many people are supporting the industry and driving the demand.
Record High Price Anxiety and Threats
Zimmerman says: “No matter where you are — whether you’re the cow-calf guy contemplating a rebuild, whether you’re a stocker operator considering that next term, whether you’re the feedlot operator looking at cash returns, or you’re the beef buyer trying to figure out how to make this product work as a distributor — you’re struggling with how to wrestle with these replacement costs.”
The economists say the key to understanding high prices lies in analyzing demand. Zimmerman says the retail prices are projected to average $8.85, showing another strong demand year is ahead. If the year stays on track, the demand level is as high as it has been since 1983.
A key driver of demand is the shared belief by producers and consumers that beef quality is defined by marbling. In the U.S. today, Prime and Choice beef consumption is up to 32 lb. per person annually. As an industry, less Select and lower graded beef products are being produced, and that is an advancement to be proud of, Zimmerman says.
During 2024 and 2025, for every 1 lb. of Select beef produced, 6 lb. of Prime and Choice beef has been produced.
As demand is analyzed, there are also real threats that come with it. Consumer income is being threatened by housing rates, student loans, credit card debt and a “buy-now-pay-later mentality.” Therefore, people are looking for ways to lower their expenses. This trend has been prevalent in restaurants, especially post-pandemic when interest in paying for a quality product at a food service establishment wasn’t worth the consumer dollar. It is the industry’s role to continue promotion of high-quality beef to restaurants, helping them retain customers and re-grow sales.
Beef Supply Stays Strong
Zimmerman shares data confirming that supply has remained steady, contrary to producer expectations. The beef-on-dairy cross industry has taken off with 450,000 head moved from veal to beef slaughter within the past two years.
Another factor filling supply is the increase in hot carcass weights, showing a 0.5% weight increase over the past 20 years, which totals about 4.2 lb. per year. Imports have also continued to increase within the past three years, and 2025 is set to reach more than 5 billion pounds of imported product.
Because of the discussed supply and demand trend factors, about 70% of cattle on feed today are using some form of risk management. However, it is not just price risk to be concerned about, but production, financial, market, institutional and environmental elements.
Tonsor and Zimmerman shared these key takeaways: Always “push the pencil” and run the numbers before making decisions, stay informed on broader trends and forecasts, and recognize elevated risks, especially in times like these.
Ultimately, it comes down to focusing on the factors you can control within your operation. The beef industry is not new to risk-taking, but it is up to producers to decide how they will handle such conditions and what risks they are willing to take with their operations.
