NASHVILLE, TENN. (RFD NEWS) — The U.S. cattle herd is still facing mounting pressure. Arlan Suderman with Stone-X tells RFD NEWS that the situation at the U.S.-Mexico border is playing a big role in the closure of several large-scale processors.
“I think this highlights the fact that we do have two markets: we have a cattle market, and we have a beef market,” Suderman said Tuesday on Cow Guy Close. “And the cattle market is hurting for numbers. We had already seen some of the reductions in packing capacity. With the reduction in shifts at the Amarillo plant and the closing of the Nebraska packing plant. And so, it stands to reason that we would eventually see a reduction in feedlot capacity as well.”
The southern border has been closed to Mexican feeder cattle for more than a year now due to the ongoing threat of New World Screwworm, a dangerous cattle parasite. Suderman says that has allowed Mexico to make moves of its own, and he warns it could come full circle when this is all said and done.
“With the Mexican border being closed, we’re seeing Mexico spend an estimated $1.1 billion to develop its packing industry,” Suderman explained. “So that’s business, we may never be able to get back here into the United States. So that’s a challenge, and that’s going to change the beef industry, the cattle industry, long term.”
Ground beef prices broke new highs in recent months, but that has not slowed demand for U.S. beef in the domestic or global market despite limited supplies.
The USDA’s latest Cattle-on-Feed report was in line with expectations, with placements at 95 percent. Live and feeder cattle markets have also seen record highs recently – but the trend has other analysts, like Barchart’s Darin Newsom, wondering how much longer consumers can hold on.
On Wednesday, the USDA ERS released its long-awaited 2026 Food Price Outlook, which forecast a 3.1% overall rise in food prices this year, in large part due to higher beef and veal prices.
“The key is how long can this last? How long will the cash markets stay strong? Is it going to start to break?” Newsom said. “I mean, both markets look a bit top-heavy at these levels, but we’ve been saying that for quite some time. You know, the real test is if they can get back up to those 2025 highs posted late in the year. If they can’t, I think we’re going to start seeing some increased selling, particularly if pressure continues to build from outside markets, most notably the U.S. stock indexes.”
We’ve got some time before a new read on the U.S. cattle herd. The next cattle-on-feed report is due on Friday, March 20.
