November 22, 2025
TYSON TO REORGANIZE BEEF DIVISION
Tyson Foods announced today that it will close its beef processing plant in Lexington, Nebraska, as part of a major restructuring of its beef operations. The decision comes amid historically tight U.S. cattle supplies, which have dropped to their lowest levels in nearly 75 years, creating significant cost pressures for meatpackers. The Lexington facility employs about 3,000–3,200 workers and has been one of Tyson’s largest beef plants, capable of processing thousands of cattle daily. [money.usnews.com], [investing.com]
In addition to shutting down the Nebraska plant, Tyson will convert its Amarillo, Texas, beef facility to a single, full-capacity shift and increase production at other facilities to optimize volumes across its network. The company stated that these changes are intended to “right size” its beef business and position it for long-term success. Tyson emphasized its commitment to supporting affected employees by helping them apply for positions at other locations and offering relocation benefits.
THE MARKETS
Late week clean up trade continued the rout in cash prices for fed cattle. Cattle owners on Wednesday accepted dressed bids of $345 or $5 lower, then came $340 — $10 lower than last week. Live trades were reported in the north at $218 or $7 lower. Late week sales continued the decline with sales at $215 in the north and $222 in the south.
The recent declines in fed prices from $245 to $215 has by and large gone to the bottom line of the processors who now can claim a positive margin and will be increasing the slaughter volume. The retailers have negotiated some limited reductions in box prices but the brunt of the losses has been in the cash prices for live cattle at the feedyard.
The “make hay while the sun shines” elevated last week’s slaughter volume to the largest slaughter since mid summer. This past week’s slaughter at 585,000 head was up 9,000 from the previous week and 50,000 — still well under last year. Two factors are changing the availability of finished cattle — heavier marketing weights and placement of large amounts of dairy beef crosses that are on feed for a year resulting in slower turnover.
ACTUAL COF REPORT FOR NOVEMBER 1
CATTLE ON FEED………… November 1………………. 98…………97.7
PLACED DURING October ………………………………….90…………91.7
MARKETED DURING October …………………………….92…………92.3
CATTLE FUTURES
Futures suffered large and sustained losses this week closing weak on Friday after a wild day of ups and downs. No long speculators are willing to enter the market faced with headwinds from the current administration in their concerted assault on beef prices.
Benchmarking. On Tuesday of each week, USDA releases a weighted average price report for all cattle sold the previous week. The report summarizes the distributed price levels for each category of sale such as Negotiated/Formula/Forward Contracts. Beef producers are able to measure the marketing price for their cattle compared to the national averages.
The Comprehensive Fed Cattle Weekly Report offers the most current information on the current status of fed cattle being harvested. The report is published each Tuesday and includes the previous week’s change in carcass weights and quality grading. The latest report shows carcass weights at 956#, 6# higher than the prior week, and 30# heavier than last year. The combined steer and heifer weights can easily be influenced when the proportion of steers to heifers in the weekly slaughter changes. Quality grade was down .2% from the previous week at 85.0% .
The Weekly Steer and Heifer Grading Report is indicative of regional supplies of choice and prime cattle and often is determinative of regional differences is live price. The report is also reflective of the current status of fed cattle offerings in each area.
Forward Cattle Contracts: Forward contracts will always bear some relationship to the corresponding futures month closest to the delivery month for the cattle. Basis levels will move up and down as processors want to add to forward contracts or not. The driver in forward purchases of cattle will always be forward sales of beef. Packers will always be willing to take a price risk off the producer’s plate in return for an extra margin.
The volatility in futures prices has caused more interest from cattle owners in forward contracting. During the past two to three years, fewer cattle have been forward sold as most producers anticipate higher prices in the future months. Some owners now are willing to set the price for future deliveries with basis levels to the futures varying by region. The problem that will slow forward contracting is the heavy discount held by the deferred live cattle contracts.
Formula and Negotiated Grids. The Price and Distribution Report delineates the various selling methods and net results.
The Cattle Contracts Report details the percent of contracts by volume of cattle and by number of contracts for selling cattle. Formula selling that was once the largest marketing method and still is, but is losing ground to negotiated grids where the premiums and discounts are set but the base price is negotiated.
If beef demand should improve heading towards the holidays, the middle meats should provide support for the cutout. Prime cuts are carving out a larger slice of the grocery offerings. Holidays provide an opportunity for many families to spurge on food purchases. Nothing creates more good will at Thanksgiving than finding a prime rib roast along side the turkey.
There are some changes apparent in supermarket marketing plans for beef. Some have to do with price and others related to the increasing weight of the carcasses. More of the carcass is dedicated to the grind and retailers are packaging larger packages of ground beef to encourage larger dollar purchases. They also are offering more blend ratios. On the middle meats some of the steaks are changing how they are presented to the consumner. Many of the ribeyes have the lip trimmed because if it is included, the cut is too large.
The Cutout. Box prices were higher to close the week narrowing the choice/select spread. The supply of beef is being carefully managed by the processors. More emphasis is expected to be focused on the middle meats as we move towards the holidays. End meat have been weak.
Replacement markets
Feeder futures have made a large adjustment downward in price, but now the downward direction is taking a toll on all levels of replacement cattle. Many heavier replacement cattle were the first to follow the market downward, but now lighter offerings are weakening. Buyers are evaluating the future marketing period for the lighter cattle and deciding if the markets continue downward for yearlings and fed cattle, the lighter cattle have the potential for large losses. On the fundamental side, auction market receipts are down as are country movement of cattle — leading to sharp reductions in placements. There is little evidence of reaching or passing the low point in replacement numbers.
Occupancy levels are falling in all regions but especially in Texas. The purchase of a 800# steer on today’s market given today’s feed cost would result in a $250 loss if the animals were hedged. Some operators would prefer to look at an empty pen. Some bankers would agree. Those who do choose to place cattle on feed, must gamble with equity on a rise in prices by next year when the cattle will sell.
The drought monitor continues to favor herd expansion. Some dryness has developed in the southern plains. Chances are good that the slow rebuilding of the nation’s cattle herd is now morphing into full throttle rebuilding and those forecasting recovery several years away will find it happening sooner rather than later.
Compared to last week: All classes of cattle unevenly steady. Demand good. Quality plain to average. Morning bidding started slightly lower. When the board opened and stayed green, cautious optimism set in and bidding leveled out at mostly steady money. Many of the buyers expressed surprise at how the market held together. Rain and cooler weather will move into the trading area on Thursday. Supply included: 100% Feeder Cattle (59% Steers, 38% Heifers, 2% Bulls). Feeder cattle supply over 600 lbs was 52%.
Compared to last week: Steer and heifer calves unevenly steady. Quality ranged from plain to fancy, with condition running from thin fleshed to full. There was something for everyone today. Supply included: 100% Feeder Cattle (48% Steers, 43% Heifers, 9% Bulls). Feeder cattle supply over 600 lbs was 29%.
Feeder Cattle Futures. Futures fell continuing the long decline of the past couple of weeks.
The lack of liquidity in the feeder contract provides a perfect environment for prices to move too far in either direction. Poor liquidity leads to extreme volatility. Overdone directional price movements frequently require corrections and traders sense the vulnerability of the contract that needs to be cash settled but the contract index needs a redo.
Feeder Cattle Cash Index. The index is tracking the moves in cash prices.
Video and Internet Replacement Cattle Auctions. The movement from traditional private treaty sales to Internet auctions has been slow but steady. Producers have chosen this option as the primary marketing tool for most of the cattle offered in the replacement markets. The market that was once dominated by one firm has seen new competition from multiple trade platforms.
National Weekly Feeder Summary released on Friday of each week tracks the national prices by region for last week.
Grain Futures. Corn prices are softening. This year’s crop remains well above the 14.5 billion bushel crop last year and the small drop in estimated yield will maintain adequate supply/use ratios. The next USDA reports will provide more definition to this year’s crop. Elevators are holding the basis flat. Corn basis levels in Guymon, Oklahoma are at +$.60 — basis the December contract.
TYSON — A GAME CHANGER
Calls went out on Friday to customers and suppliers from Tyson management, assuring them of a continuation of good services and products with the least disruption to normalized business. The reality is the announcement will be a game changer for the industry. Tyson is the largest beef processor in the United States processing over 6.2 million cattle annually and holds about 25% of the U.S. beef market share. Tyson’s beef division generates approximately $17 billion in annual revenue.
Overcapacity in the beef processing business has been obvious to everyone participating in the beef chain. The processors have lost hundreds of millions of dollars competing for a dwindling supply of cattle. Most participants thought a plant might close, but because the four largest companies that harvested 85% of the cattle had diversified meat products, few believed one of them would make the first step. With this move Tyson concedes the top position to Brazilian giant JBS.
The announcement ironically comes at a time when the processors have returned to profitability following a $30 cwt. decline in fed cattle prices. It also comes at a time when the nation’s feedyards are filled with the largest inventory value of cattle in the history of the beef business. Reducing slaughter capacity will change the leverage between processing and feedlots that has been in the hands of cattle owners for the past couple of years. Beef plants that have been killing pared back 32 hour weeks will return to full capacity giving them better efficiency and profitability.
The squeeze that forced Tyson to close one plant and downsize another will now rotate to the feedlots. Tyson’s announcement doesn’t see a return to more normalized cattle numbers for 2-3 years, but a more likely scenario is increasing numbers of cattle late next year. Meanwhile some cattle feeding capacity will be likely to close. The pricing of the current inventory of cattle into the processors will likely result in record losses for the feeding industry. Many will say the Tyson announcement does not change the small supply of cattle and they are correct, but much the financial benefits to the cattle feeder have come from losses at the beef plants and those will be gone.
The squeeze also will move down the chain to the stocker operators who have been forced by competition to overpay for calves for grazing and backgrounding. They will now be looking at red ink on sales to the feedlots. Many winter grazing locations will go unstocked this year because of negative margins and the scarce supply of yearlings for spring placement will be further reduced.
This announcement will play into the administration’s goal of reducing beef prices. The short supply of beef won’t change in the short term, but as leverage moves to the processors, the supply chain will become more efficient, and retailers and consumers will benefit. The new plant in North Platt Nebraska and the under-construction plant in Amarillo, will be breaking out the champagne as will all of Tyson’s competitors. IBP’s long tradition of innovation in beef packing is now, under Tyson, seeing an important part of that legacy unwind.
CATTLE REPORT LIBRARY
Change is a necessity for any sustainable industry and sometimes necessary changes encounter obstacles in the form of stalwarts who refuse change. The Cattle Report has created a library page of opinions pieces published on these pages advocating fundamental and structure changes for the industry.
NOTE TO READERS
Sections of the newsletter are designed with hyperlinks to the appropriate source pages. The hyperlinks are in light blue within the report.
EXPLANATIONS OF BREAKEVEN/CLOSE OUT TABLES
Regional differences in grain and cattle basises create a difficulty in modeling a national composite for current close outs or a proforma forward look at a breakeven. Readers should consider your own area for adjustments to these models. Most calculations are basis relevant prices in Guymon, Oklahoma.
CURRENT BREAKEVEN PROJECTION
The Cattle Report introduces the FEEDER METER. The report estimates profit or loss for currently purchased feeder steers and projects a result 180 days out. The chart is interactive and updated every 15 minutes in real time based on changes in futures markets in grain and cattle. Corn basis information is based on current trade prices adjusted every two weeks. Feeder prices are based on the USDA index price for 800# steers and fed cattle sales are $2 cwt. premium the appropriate futures contract.
CURRENT CLOSE OUT
The Cattle Report estimates current profit or loss on cattle placed on feed 180 days ago. This report generated from industry averages attempts to simulate a typical close out based on the feeder index for 800# steers 180 days ago. The close out assumes grain was purchased at market each month. Selling prices and interest rates are based on prevailing benchmark quoted prices. This chart will change weekly.
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