Livestock Producers Must Stay Ahead of Market Challenges

Livestock producers have enjoyed a relatively strong year compared to their crop counterparts, but they must remain vigilant and informed to maintain their edge, according to Don Close, a senior protein analyst from Terrain.

Cow calf producers are in a stronger economic position due to high prices, while cattle feeders are also in a good position, albeit not as strong as cow calf producers. However, the exceptional year experienced by cattle feeders in 2025 has been followed by limited profits in 2026 due to high feeder cattle replacement costs, escalating feed grain prices, and poor risk management options.

Close emphasized that knowing one's cost of production is essential for making informed marketing decisions. The current correction in the market has narrowed the price spread between cash cattle prices and futures, improving hedging opportunities.

Cattle feeders must focus on margin capture and the continuous rollover of inventory, while cow calf producers need to decide whether to retain ownership or heifers for expansion. With the recent realignment by Tyson and other packers, producers should be aware of which facilities their cattle work best in and maintain relationships with those locations.