The beef industry has experienced a year of “hybrid vigor” as cattle prices soared due to tight supplies and increasing consumer demand, summarizes CattleFax’s Kevin Good.
“The market has gotten a lot higher than any of us would have suggested as we started the year,” he says. “Now the market is anticipating some of those things that propelled the market to higher highs to come off. In other words, tariffs being reduced as well as the Mexican border reopening.”
Forecasting strong prices into 2026, the next market phase will be shaped by herd rebuilding and shifting global trade, Good adds. The volatility and political noise will continue, but the fundamentals will still matter.
Here are five key takeaways from Good’s presentation at the recent Kansas Livestock Association Convention:
1. The markets are experiencing significant volatility, largely influenced by noise in the media, tariffs and the Mexican border closure.
Good says regional market dynamics spotlight Kansas and the Midwest as more advantaged relative to Texas, for example, which faces tighter supplies and higher costs until the Mexican border reopens.
Market volatility is strongly influenced by psychology and external policy issues.
“Psychology can take the markets higher than they should otherwise, and they can take them lower than they should otherwise,” he explains.
2. The dairy industry’s role in the beef supply is growing.
“We are getting more beef out of the dairy industry than we ever have in the past,” Good says.
- This is the largest dairy herd in about 25 years.
- A bigger percentage of the dairy producers’ income is derived from beef — salvage cow value or day-old beef-on-dairy calves.
- In 2025, 18% of the cattle harvested will be dairy or beef-on-dairy cross.
- Slower culling: Dairy producers have transitioned from culling cows after their third lactation to their fourth lactation.
- The export portion of dairy revenue has tripled in the last 25 years.
3. Strong consumer demand continues, but high prices pose risks.
Beef demand and evolving consumer preferences are shaping industry profitability. Consumer demand for high-quality protein remains strong, but there is concern about potential pushback if prices stay high. Good predicts retail prices may soften somewhat next year, but market fundamentals are still solid.
“If we just continue to focus on what’s paid us over the last 25 years as beef demand has improved — quality and consistency — it is as simple as that,” he says.
4. Future expansion remains tentative, hinging on weather and profitability.
“We liquidated for about six years, probably one to two years longer than the economics suggested because of drought,” Good says.
The outlook projects continued tight supply for the first half of next year and possibly lower prices in the second half, with gradual expansion expected to follow depending on weather and economic conditions.
5. The overall market outlook is healthy but shifting.
Good says packing capacity continues to favor cattle feeders for now, but labor challenges and changing market cycles could impact this leverage in the coming years.
“Big picture … we’re suggesting we’ve seen our cycle high. The trends changed. Fundamentals are still solid. Beef demand is great,” Good says.
“Generally speaking, I would say [there’s a] positive outlook looking at prices,” he says. “If we make the assumption the border reopens in the first half of next year, and at the same time tariffs are more normalized … average prices for next year will be a little bit lower. [2026] will be a tale of two halves — the first half will resemble the second half of this year and then you’ve got more risk as you go through the second half of next year.”
Good is optimistic for continued profitability for the cow-calf producer in 2026.
“Just think about the dollars in the system,” Good summarizes. “Our prices have gone up at least 2% on an annual basis, faster than inflation, for 25 years. Those are real dollars — real dollars that are now landing in your pocket no matter what segment of the business you’re in.”
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