Ending the Cycle? Meat processors are being caught in buy-sell margin challenges

The U.S. cattle herd is shrinking, boosting prices for producers, but causing concerns down the line.

Oklahoma state ag economist, Dr. Darrell Peel, says that the beef industry has been cyclical for 150 years, but that pattern may be changing in 2025.

“If you’re following it at all, you know that we’ve got record-high cattle prices across the board for all kinds of cattle. We’ve got record-high beef prices at the wholesale and retail levels, and so there’s lots of supply-driven fundamentals here that are really driving the market. We’ve had an incredible beef demand to match that, which is why we can maintain these record-high prices at the consumer level, but there’s also lots of challenges along the way.”

Those challenges, Dr. Peel says, start to show up at the processor level.

“Everybody is really caught in this, in this challenging, sort of adverse, buy-sell margin because of the supply-driven price increases from the bottom up in terms of animal production. And so, that’s the environment that everybody’s in right now, and you know, again, without getting into too much of the detail, the bottom line is it’s going to be a while— this is not going to be a fast process.”