Category: Livestock Marketing

For some of us, Christmas means tamales!  To stick with the traditional tamale, this means pork. Yes, some people do make other kinds, and a wide variety are traditional in other countries and the Delta, but we will stick with pork for today’s article because it’s a good reminder to check on recent pork prices.

Hog and pork prices tend to have a highly seasonal pattern that, generally, peaks mid-year.  That price seasonality is related to production seasonality.  Hog slaughter is the lowest during the summer and tends to peak in the fall.  Dressed weights per carcass are usually the lowest in the heat of summer. Following slaughter and weights, pork production bottoms are the lowest in the summer and peaks in the fall.  

Pork production during June-August 2025 was 3.2 percent lower this year than last year.  However, since August, pork production has been 1 percent more than last year.  Production during the second week of December hit 593.6 million pounds, which was the largest weekly production in more than two years.  

Hog and wholesale pork prices have declined sharply as production has increased.  National, weighted average, hog carcass prices net of any carcass premiums and discounts were $82.96 per cwt in mid-December, down from a peak of $108.79 earlier in the summer.  The shoulder cuts, butts, and picnics are often used in pork tamales.  Pork butt and picnic primal values were $111.03 and $83.39 per cwt, respectively, in mid-December.  Both were a little above the values for the same week in 2024 and well below their summer peak.  

Hogs and Pigs report

USDA will release the December Hogs and Pigs report in the afternoon of December 23^rd (today, if you’re reading this early Tuesday morning).  Market analysts expect the breeding herd to be about 1 percent smaller than December 2024.  The number of market hogs should be about the same as a year ago.  The report will have an estimate of expected sow farrowings during the first 6 months of 2026.  Analysts expect farrowings to be slightly larger than during the first half of 2025.  The report will be an interesting one because producers have struggled over the last several years.  Falling feed costs and this past Summer’s high prices returned some profits to producers.  High fertilizer prices have made the manure much more valuable, helping the overall farm operation.  But, falling prices late this year brought profits down to about break even again.  

Tamale Day

My friends and I have our tamale-making day scheduled for December 21^st, so by the time you read this, we’ll be relaxing for Christmas.  All of us livestock economists at Southern Ag Today wish you the Merriest of Christmases!

Anderson, David. “Tamale Time!“ Southern Ag Today 5(52.2). December 23, 2025. Permalink

Dairy product prices and milk prices usually get a demand bump leading into the holidays due to baking ingredients and cheese.  That bump never materialized this Fall as rapidly rising milk supplies swamped any demand led increase in prices.  

Profitable milk prices in 2024 and lower feed prices started herd expansion.  Milk processing capacity has expanded, as well, supporting the increase in production.  Record high cattle prices have played an important role in dairy herd expansion through cull cow revenues and much higher prices for crossbred calves from dairy cows and beef bulls, often referred to as “beefxdairy” or “beef on dairy” calves.  

Starting with the dairy herd, the number of dairy cows hit 9.581 million head in September 2025.  That was 228,000 head more than in September 2024 and the most since the early 1990s.  While the number of dairy cows did decline by 6,000 head in October, the herd remains large.  

Like the rest of livestock agriculture, productivity has been increasing for many years.  Pounds of milk per cow totaled 2,033 in October, up 1.5 percent from October 2024.  More milk per cow, combined with the most cows since the early 1990s, produced 19.5 billion pounds in October, a 3.7 percent increase over October 2024.  

Milk and dairy product prices began to decline under the weight of record large milk production.  By early December, butter prices averaged $1.60 per pound, down from $2.59 per pound last year at this time.  Cheddar cheese, reported in 40 pound blocks, dropped to $160 per pound in early December compared to $1.78 last year.  Non-fat dry milk prices are about 18 percent lower than last year.  These product prices are used to calculate Class III and Class IV milk prices under federal milk marketing orders.  Class IV milk prices declined to under $14.00 per cwt in November, with Class III prices at $17.18 per cwt.  

These milk prices are very low and will lead to financial losses for many producers.  Losses should lead to some supply response, reducing milk production.  But, the impact of low milk prices will be offset somewhat by continued high cull cow and calf returns.  Dairy cow culling has increased late this year, slightly surpassing dairy cow slaughter in the second part of 2024.

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Anderson, David. “Milk Prices Falling Fast.” Southern Ag Today 5(51.2). December 16, 2025. Permalink

Eunchun Park, Christopher N. Boyer, and Clinton L. Neill^[1]

The live-to-cutout beef price spread is the difference between the value of boxed beef and the price paid for live cattle and is a commonly used metric in the industry. This article summarizes a recent paper by Park et al. (2025) that used this metric to explore what happens to the differences in these prices when beef packers process capacity changes. Specifically, this paper explores what happens to the price spread when a processing plant goes offline temporarily or permanently. 

The key distinction between a temporary and or permanent closure is temporary closures are often unexpected, with short notice, while permanent closures might be more telegraphed or planned. Temporary outages—such as the Tyson Holcomb fire in August 2019 or the COVID-19 disruptions in spring 2020—remove effective capacity without warning. In those periods, the study found the price spread tends to move to a higher level with greater week-to-week volatility, and that wide-band behavior often persists for several weeks before normalizing. By contrast, permanent closures are generally announced in advance, allowing time to adjust cattle flows, freight, and line schedules. Because the industry can prepare, the spread before and after a permanent closure typically resembles normal trading conditions.

Figure 1 illustrates these patterns. The black line shows the weekly live-to-cutout spread. Blue vertical lines denote permanent closures (ConAgra 2000; Tyson 2008; Cargill 2013), while red lines denote temporary outages (Tyson fire 2019; COVID-19 2020). Around permanent closures, the spread looks normal. Around temporary outages, it jumps and stays jumpy for several weeks. The temporary events align with sharp run-ups and a bumpier path in the weeks that follow.

The implications of this study differ by audience. For producers and feedyards, treat the first two to four weeks after an unexpected outage as a high-variance window. Expect a higher average spread and larger week-to-week swings at the same time. Maintain an additional working-capital cushion, widen basis and grid bands in cash-flow plans, and be conservative on marginal pens. If marketing on the grid, expect greater dispersion and review terms that are usually taken for granted when capacity is tight. For lenders and risk managers, stress tests should raise both the level and the variance of the spread, with horizons long enough to cover the typical persistence of the high-regime window.

Permanent closures call for a different approach. When changes are announced and phased in, the market usually adapts without dramatic swings in the spread. The task is primarily logistical—update cattle routing, confirm shackle space, and revise freight and plant schedules—while keeping standard cash-flow settings.

Why rely on the spread? It is public, timely, and can reflect packer margins and producer net prices. When capacity tightens, harvest slows, boxed beef firms, and the spread widens—often before other indicators move. No complex model is required; it is enough to know the usual range for your region and when to widen operating bands.

In short, temporary, unexpected outages create brief intervals when the spread runs higher and volatility increases; plan the first month around that reality. Permanent, telegraphed closures generally allow the industry to adjust with less disruption. Match the playbook to the shock type to reduce hurried decisions when plants stop.

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Figure 1. Weekly live-to-cutout beef price spread ($/cwt), 1992–2024. Vertical lines mark processing-capacity shocks: blue = permanent closures (ConAgra 2000; Tyson 2008; Cargill 2013) and red = temporary outages (Tyson Holcomb fire 2019; COVID-19 2020). Temporary shocks coincide with short-lived regime shifts—higher levels and choppier volatility—while permanent closures show little persistent change in the spread.

References

Park, E., Boyer, C. N., and Neill, C. L. (2025). A Markov regime-switching event response model: beef price spread response to processing capacity shocks. Empirical Economics, 68:1039–107.

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^[1] Eunchun Park is an Assistant Professor in the Department of Agricultural Economics and Agribusiness / Fryar Price Risk Management Center of Excellence at the University of Arkansas, Christopher N. Boyer is a professor in the Department of Agricultural and Resource Economics at the University of Tennessee, and Clinton L. Neill is an adjunct assistant professor Department of Population Medicine and Diagnostic Sciences at Cornell University.

This year, there have been several Southern Ag Today articles discussing the impacts of tight fed cattle supplies on prices, cattle on feed, slaughter weights, and total beef production (Anderson 2025a, Anderson 2025b, Maples 2025). On November 21, Tyson announced that they would be closing their Lexington, Nebraska plant in January 2026. Following the announcement, there have been a lot of questions revolving around the impact of the closure on national slaughter capacity utilization (CU). 

The Lexington, Nebraska plant had an approximate daily capacity of 5,000 head. That equates to approximately 20% of Tyson’s daily capacity (25,800 head/day) as a company. In Martinez et al. (2023), we showed a measure of national slaughter capacity utilization, which measures the ratio of operational cattle slaughter capacity over total physical capacity. To estimate the impact of the closure on the national CU, we use 2025’s monthly slaughter with an adjusted 2025 slaughter CU. The adjusted CU is simply adjusting the national CU with the daily 5,000 head taken out. Figure 1 displays the monthly national federally inspected (FI) slaughter capacity utilization with the previous 5-year average (thick blue line), 2024 (orange dotted line), 2025 (grey thin line), and 2025-Adjusted (green dashed line). 

Figure 1. Monthly National Federally Inspected Slaughter Capacity Utilization

The adjusted capacity utilization is closer to the previous 5-year average. Evaluating data through November, the average for the 5-year average was 90.1% while the 2025 and 2025-adjusted average through November are 83.1% and 87.7%, respectively. In November, slaughter capacity utilization averaged 83.5%, which was lower than November 2024 (88.4%), the previous 5-year average (89.8%), and the 2025-adjusted (87.8%).Overall, 2025 has seen declining fed cattle numbers in the cattle on feed reports and higher fed cattle prices, leading to low or negative packer margins. While the supply chain is offsetting tight cattle supplies with larger carcasses, the closure of the Lexington plant certainly signals there is excess capacity at this time. This is the first large scale plant to close since 2013, when Cargill closed their Plainview, TX plant, which was also during a time when cattle supplies were tight.  There have been reports that Tyson is looking to buy that Plainview plant. Additionally, there are some plants that are reported to come online in 2026 and 2027. It is fair to question if the adjusted capacity utilization is a new norm, or simply a short run adjustment by the supply chain.

References

Anderson, David. “Fewer Marketings, Tighter Beef Supplies.” Southern Ag Today 5(26.2). June 24, 2025. 

Anderson, David. “Working Less on Friday!” Southern Ag Today 5(21.2). May 20, 2025.

Maples, Josh. “Cattle Prices Hit New Highs and Carcass Grading Trends Over Time.” Southern Ag Today 5(19.2). May 6, 2025.

Martinez, C., Li, P., Boyer, C. N., Yu, T. E., & Maples, J. G. (2023). Beef price spread relationship with processing capacity utilization. Journal of the Agricultural and Applied Economics Association.https://onlinelibrary.wiley.com/doi/full/10.1002/jaa2.48

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Martinez, Charley, and Parker Wyatt. “The Impact of Tyson’s Closure on Beef Slaughter Capacity Utilization.” Southern Ag Today 5(49.2). December 2, 2025. Permalink

Amid the drumbeat of bad news in the cattle market over the last month, including on-again, off-again tariffs, jawboning for lower beef prices, and now Tyson’s announcement that they will close their beef packing plant in Lexington, NE, in January, USDA released a cattle on feed report.  (We’ll look at the impact of the plant closure on packing capacity in a future SAT).    USDA caught up on cattle on feed following the shutdown when they released the COF report on Friday, November 21^st.

The report did not contain many surprises.  Placements and marketings were down 10 percent and 8 percent, compared to October 2024.  The combination left the number of cattle on feed down 1.6 percent compared to November 1, 2024. 

The most interesting, and important, number in the report was the number of heifers on feed.  Heifers on feed is normally reported in the October report, but that was delayed due to the shutdown.  There were 4.355 million heifers on feed on October 1, 2025.  That was 245,000 fewer than October 1, 2024, and the fewest heifers on feed for an October since 2018.  It also represented the 5^th consecutive quarter of year-over-year declines in the number of heifers on feed.  That would seem to be positive news if looking for evidence of herd expansion. 

But the heifer data on feed for October 2024 would have included spayed heifers imported from Mexico.  Over the April-September 2024 period, 266,559 spayed heifers were imported.  So, the decline in heifers on feed reflects no imported heifers from Mexico this year and any decline in domestic heifer feedlot placement.  The expectation is that fewer spayed heifers would have been imported this year compared to last year, but considering imports, the report doesn’t indicate a lot of heifer retention.

The report included a rare event with Texas slipping to number 2, reporting 10,000 fewer cattle on feed than Nebraska, 2.63 million head versus 2.64 million head.  The last time Nebraska had more cattle in feedyards than Texas was May 2018.  The lack of Mexican feeder cattle imports is the most important factor in this ranking reversal.  

There were a couple of other interesting numbers to think about.  More steers were reported on feed than a year ago.  At first glance, we might think that seems surprising given the decline in cow numbers, but days on feed is boosting total cattle on feed inventories, given overall declines in cattle numbers.

All of us livestock economists at Southern Ag Today wish you all a blessed Thanksgiving with as many of your family and friends as possible!

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Anderson, David. “A COF Report Comes Out Among Other Headlines.” Southern Ag Today 5(48.2). November 25, 2025. Permalink