Industry fears about the effect of packer losses and low cattle numbers were realized last week when Tyson Foods announced its intention to close the Lexington, Neb., beef packing plant, and that the Amarillo, Texas, plant would decrease to one shift from two in coming months.
This will reduce industry slaughter capacity by roughly 7,000 to 8,000 head a day, said Derrell Peel, Oklahoma State University Extension Livestock Market Specialist in a letter called Cow-Calf Corner.
The exact effect will depend on forthcoming details, especially how Tyson will manage a one-shift plant, Peel said.
Meatingplace reported that Nebraska’s governor and congressmen were calling on Tyson to mothball the plant rather than close it permanently, but there was no response from Tyson.
ACTUAL EFFECTS
Depending on the details, the reduction represents roughly 7.5% to 9.0% of total industry slaughter capacity, Peel said.
Monday through Friday daily fed slaughter thus far in 2025 averaged 90,529 head per day, down 3.6% from the peak of 93,931 head per day in 2022, Peel said. However, Saturday slaughter has averaged 4,878 head this year, just 13.1% of the 37,137 head-per-day average in 2022.
For the first 45 weeks of the year, total weekly fed slaughter averaged 457,524 head, compared with 506,793 head per week in 2022, a decrease of 9.7%, Peel said. The Tyson planned reduction in packing capacity may be nearly enough to balance the decrease in cattle slaughter since the peak in 2022.
However, fed slaughter was expected to continue decreasing in 2026 and 2027, Peel said. Excess packing capacity will continue to be an issue for beef packers for the foreseeable future.
IN OTHER NEWS
In other news last week, the latest spins of the big tariff roulette wheel included lifting the 10% tariffs imposed in April on countries from which the US imports beef, Peel said. A few days later, the additional 40% tariff imposed on Brazil in August was removed.
Brazil filled the “Other Country” tariff rate quota in January but still faces the 26.4% over-quota tariff rate, Peel said. For the first seven months of the year, Brazil was the largest source of US beef imports.
This year, Brazil has gone from a zero percent within-quota tariff (filled by Jan. 17) to a 26.4% over-quota tariff, to which an additional 10% tariff was added in April for a 36.4% total, to which an additional tariff of 40% was added in August for a 76.4% total, back to 66.4% total after removal of 10% tariffs in November, followed a few days later by removal of the 40% tariff and, thus, back to the 26.4% over-quota tariff until the end of the year (maybe) when the “Other Country” quota resets for another year.
LACK OF DATA
Lack of trade data resulting from the shutdown makes it impossible to quantify the effect of the August tariff on beef imports from Brazil, let alone the effects of now reverting back to the situation from early in the year, Peel said. There will be effects, likely relatively small, on the ground beef market – probably more likely to simply moderate future increases rather than actually reducing ground beef prices in the US.
Certainly, there will be no relief for high steak prices, with even higher prices likely ahead as beef production continues to fall.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $223.13 per cwt to $223.68, compared with last week’s range of $225.92 to $232.00 per cwt. FOB dressed steers and heifers went for $351.99 per cwt to $352.20, compared with $353.46 to $362.66.
The USDA choice cutout Monday was down $0.99 per cwt at $370.49 while select was off $1.47 at $355.51. The choice/select spread widened to $14.98 from $14.50 with 97 loads of fabricated product and 23 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $403.34 per cwt, and 50% beef was $134.34.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.05 to $1.20 a bushel over the Dec corn contract, which settled at $4.23 3/4, down $0.01 3/4.
The CME Feeder Cattle Index for the seven days ended Friday was $336.38 per cwt, down $3.34. This compares with Monday’s Jan contract settlement of $304.97, down $9.25.