Market Outlook
Beef demand booming: When will the cows come home?By Brian Earnest
Beef is a demand-driven market that has remained exceptionally strong throughout 2025. Reflecting on this year, beef prices reached new highs around the world and cattle values have skyrocketed. Global trade flows spiked on price signals, with both incentives and restrictions.
For 2026, there is much evidence to consider more of the same.
Cattle availability issues are not easing as extreme weather conditions, both colder temperatures and drought, have been disruptive to the flow of cattle in recent years. New World screwworm (NWS) also remains a factor as disease pressure and halted live cattle imports impact cattle health and availability in the U.S.
Strong demand and limited cattle availability have grown the percent of retail beef dollars shared by cattle ranchers to an abnormally high number in recent years. A feature that is likely to continue expanding in the near future while packer margins will remain under pressure, and feeders will benefit only from cheap feed costs. Even more, there are potential improvements to capital costs with declining interest rates amidst rising cattle values.
Consumers are still buying beefDemand for protein, especially beef, has been strong this year as consumers seek out high-quality meats. The consumer, equipped with knowledge, recognizes how marbling enhances their eating experience. Premiumization and access to high-quality cuts are driving retail purchase activity and adding to the success already achieved at fine dining establishments.
Retail dollar sales of fresh beef during the 52-weeks ending in October were up 12% year-over-year at $44.3 billion (Circana). This one category alone accounts for 56% of the $78.5 billion in all retail fresh meat sales. But it is not just sales dollars, beef also led growth in pounds sold up 4.7% YoY over the past 52 weeks.
Grinds have been on fire this year. Beef is at the top of the list, with more than 85% of the retail ground meat sales segment. Ground beef sales saw double digit growth, up more than 13% YoY totaling more than $17 billion in the 52-weeks ending in October, according to Circana sales data. Volume grew too. Pounds sold were up 3.8% YoY for the period.
Notably, ground beef is gaining competition in nontraditional grinds. Ground chicken sales rose by 21% YoY, with volume increasing 22%. However, retail ground chicken sales remained much lower than ground beef, totaling $393 million.
Some might suggest that the rapid growth in ground chicken represents the consumer trading down from beef – to chicken. However, ground beef dollar sales growth was seven times larger than the gains to ground chicken. So it’s more likely the overall lift is from cost-conscious consumers seeking grinds to satisfy a protein offering through value and versatility.
This type of growth is unmatched by the other animal proteins and can be attributed to a few key factors such as taste and quality. According to the October 2025 Meat Demand Monitor published by the Department of Agricultural Economics at Kansas State University, the top three values for consumers when they purchase protein were taste, freshness and price.
The abundant access that today’s U.S. consumer has to high quality beef rivals any other time in history, or any other country. In 2025, the three months of March, April and May had more pounds of Prime grade beef produced than Select. U.S. beef Prime production share has not been this good in 37 years. With data through August, Choice still holds three-quarters of market share, and Prime and Select are equal at 12% and 13%, respectively.
Improving genetics, nutrition programs, feedlot occupancy and overall technology all promote optimism for continued improvements to U.S. beef product quality moving forward, further sewing a bond with the consumer.
U.S. cattle market turbidity The million-dollar question in the beef sector over the past three years is “when will the beef cow herd expand?” There was no whipsaw evident in heifer retention in 2025. If meaningful retention had occurred, the strain on processors would have been even more pronounced as females for rebuilding would have meant fewer cattle available.
Heifers as a percentage of fed cattle inventories dipped mid-year. Most industry analysts are targeting somewhere around 37% as a zone where retention is showing up. Beef-on-dairy suggests a 0.5-1.5% variance, so it is possible retention started showing up around mid-year, but confidence in expansion remains muted.
Retention has been an increasingly difficult decision for the cattle rancher over the past couple of years with persistent drought conditions, restocking feed piles, average age being 58 years old, and rising input and borrowing costs.
Heavier cattle have eased pressures on total beef production even with a reduced herd inventory. After rising just 4 lbs. annually over the last twenty years, cattle weights spiked by 27 lbs. in 2024, and another 24 lbs. or 2.5% through September for 2025, averaging more pounds per head. The modern steer carcass is 130 lbs. heavier than the 2005 version.
We question how much higher weights can go without impeding the consumer experience for high-end cuts like the ribeye. At some point this item will be out of spec for many restauranteurs.
This concept plays into how efficient the cattle sector has become; and it is not solely limited to beef animals, but dairy cattle too. The more days cattle spend on feed, the law of diminishing returns applies, because eventually feed conversion to muscle declines and more fat is put on the carcass.
This can bring down meat quality and the excess fatty trim needs to find a market. The challenge becomes finding more lean beef to mix in with the trim considering the strong demand for ground beef in modern society.
Another question regarding cattle inventories comes from when live cattle exports from Mexico will resume. In 2023 and 2024, the U.S. imported more than one million head of cattle from Mexico, which was virtually none in 2025 after cases of NWS were confirmed by Central American countries. Texas has been the most impacted state as approximately three-quarters of cattle imported from Mexico enter Texas feedlots.
Coupled with NWS, there were weather issues complicating the flow of cattle during the first quarter of 2025 if either is less of a factor in 2026, and cattle numbers improve YoY, there is likely to be a false sense of security when it comes to beef production potential.
Rebuilding the nation’s beef cattle supply will take multiple years not just months. A calf born in the spring of 2025, held back for production, will not add a calf until at least the spring of 2027, and it will be 2029 before that means more beef from the retained heifer. Inventory turbidity and market volatility embolden importance of risk management.
The great American beef trade offDuring calendar year 2024, beef and beef products was the third-largest U.S. agricultural export valued at $10.5 billion. South Korea was the top destination for U.S. beef, followed by Japan, China, Mexico, and Canada.
Through August 2025, U.S. beef exports were down 9% YoY, and China has fallen from the third to fifth top destination, according to data from the U.S. Meat Export Federation. This is important because there are variety meat and offal beef items that do not have a strong demand in the U.S. that are desired elsewhere.
Maintaining strong trade relationships does not only apply to exports but imports as well. In 2025, Brazil, Australia and Canada were the three leading countries the U.S. imported beef from. These three alone made up over 60% of U.S. beef imports. The need for this lean beef is critical to help meet consumer demand at home.
Still bullish on beefWhile the beef market is treading in uncharted territory, economics have continued to lead the market through a highly turbulent 2025. The story of exceptional demand outstripping supply did not happen overnight and has been years in the making. Price remains an economic problem solver when it comes to market imbalances. And while beef prices are pushing new records, there are plenty of reasons to remain bullish beef.
Again, the beef industry is a demand-driven market that is still paced at full steam ahead. High-quality protein is sought after by a large majority of consumers in the U.S. and abroad.
Softened feed costs, the largest expense on a livestock operation, have yielded improved profit margins despite other rising input costs like construction materials and labor. The market will continue to decide the price based on current dynamics, but for now, there is still optimism in the beef market.
Earnest is lead economist for animal protein in CoBank's Knowledge Exchange division.
