Tyson Plant Closure Signals New Phase in Tightening Cattle Cycle
- Brooke Bouma Kohlsdorf
- 5 hours ago
- 3 min read
Tyson Foods’ decision last month to shut down one of its largest beef-processing plants in Lexington, Nebraska, has organizations scrambling to support the thousands of employees who will soon be out of work and cattle ranchers wondering what is ahead. The company is the nation’s largest meat supplier. It plans to close the 3,000-employee facility—which can process nearly 5,000 head of cattle per day—in January.
The shutdown comes as an historic cattle shortage continues to squeeze meatpackers. As Wall Street Journal reporter Patrick Thomas noted, “Meatpackers including Tyson have been losing hundreds of millions of dollars processing beef because of the lowest amount of cattle on U.S. pastures since the 1950s.”
Tyson’s cattle costs rose nearly $2 billion in fiscal 2025, contributing to an adjusted $426 million loss in its beef division.
Tyson is also cutting production at its Amarillo, Texas, plant, scaling back to a single shift at a facility capable of slaughtering 6,000 cattle per day. Together, the moves represent the most significant capacity reduction by a major packer in the current supply crunch.
Cattle Market Tightening into 2026
While the closure raises immediate concerns about beef availability and the prices local producers may receive, experts say the bigger story is what’s coming next.
“The market isn’t going to come under supply pressure for another two years. It’s going to get tighter,” said Corbitt Wall, livestock market analyst and host of the Feeder Flash show.
He told American Farmland Owner that supplies likely won’t bottom out until late spring or summer of 2026.
Years of drought across nearly every major cattle-producing region forced ranchers to shrink their herds through heavy culling. Although herd rebuilding has begun, it’s a slow process, especially because it takes at least two years for a retained heifer to produce a calf ready to enter the supply chain.
“It has to get worse before it gets better because they have to keep heifers back to make cows out of them,” Wall explained. “That all means tighter supply. We have to get through that rebuilding process before the market comes under supply pressure.”
Reuters recently reported that Tyson expects its beef division to post another $400 million to $600 million in losses in fiscal 2026.
Impact on Cattle Producers and Prices
Industry analysts warn that closing a major plant could further squeeze cattle producers. With one fewer large buyer bidding on livestock, ranchers, and feedlots may see additional pressure on the prices they receive. The National Cattlemen’s Beef Association expressed concern, noting that the closure stems from “excess processing capacity in the face of historically low cattle numbers.”
For consumers, the situation is more complicated. Reduced processing capacity can limit beef production and potentially push retail prices even higher. But Wall stresses that beef prices at the grocery store don’t necessarily track cattle prices.
“The price of cattle does not have a high correlation to the price of beef at the retail level,” he said. “Retailers are basically going to charge all that they can for beef all the time.”
Even with higher prices this year, demand has remained strong. “The demand for beef is good. It hasn’t slipped,” Wall added.
Beef has long been one of the most expensive items on the grocery list, and despite rising prices, consumers continue to buy it.
What Consumers Can Expect Next
With herd rebuilding underway and processing cutbacks beginning, beef supplies could tighten even further heading into 2026. That likely means strong cattle prices, continued profit challenges for packers, and steady-to-higher retail beef prices.
Tyson maintains that its restructuring will ultimately strengthen its beef business. The company says the changes are meant to “right size” operations while keeping up with customer demand by shifting volume to other facilities. Tyson has also pledged to support affected workers during the transition.
