Beef prices are projected to continue increasing as U.S. beef production declines with no clear signs of a herd rebuild. At the start of 2025, U.S. cattle inventories fell to their lowest level since the 1950s, confirming that the industry remains deep in the liquidation phase of the cattle cycle. Since peaking at 94.7 million head in 2019, the national herd has contracted by about 8 million head, a decline driven by weaker producer profitability and persistent drought conditions across key grazing regions.

This liquidation phase, part of a 10- to 12-year cattle cycle, is now being felt at every stage of the beef supply chain. Tighter cattle numbers are limiting throughput, increasing per-unit costs, and reducing flexibility for feedlots, processors, and retailers. The effects are also showing up clearly at the consumer level. Retail beef prices averaged $8.56 per pound through August 2025, roughly 60 cents higher than a year earlier, according to U.S. labor data.

Over the past two years, beef has been nearly four times more expensive per pound than chicken, raising concerns about price competitiveness. While domestic protein demand remains relatively strong, analysts see early evidence that consumers are becoming more sensitive to higher beef prices. As a result, poultry continues to gain ground, supported by faster production cycles and lower input costs compared with beef and pork.

Pressure on prices is no longer just a U.S. issue. Brazil, one of the world's most important sources of affordable beef, is entering a new tightening phase. After two years of strong production and exports fueled by large herds and low cattle prices, the cycle is turning. Rising calf prices are signaling the start of heifer retention, as Brazilian ranchers hold back female cattle to rebuild herds. This shift reduces slaughter volumes and marks the beginning of a multi-year scarcity period, limiting global supply just as protein demand remains elevated.

At the same time, U.S. beef processing capacity is coming under strain. With fewer cattle available, plants are operating well below historical utilization levels, squeezing margins and increasing the risk of closures. Tyson Foods Inc. recently announced the closure of a Nebraska beef plant and reduced operations at a Texas facility. Industry experts warn that additional large and regional plants could shut down over the next 18 months, particularly in regions that depend on cross-border cattle flows, though no area is fully insulated from the pressure.

Looking ahead, beef prices are expected to remain firm, supported by tight cattle supplies in both the U.S. and Brazil. While higher prices may improve revenues for some producers, the broader sector will continue to face challenges tied to input costs, labor availability, and processing bottlenecks. The current cycle underscores the need for long-term planning and supply chain resilience as global livestock markets navigate an extended period of constrained supply.