40 NEBRASKA CATTLEMAN April/May 2026 PEERS STRONG DEMAND, TIGHT MARGINS AND THE CASE FOR STAYING DISCIPLINED CAITLYN GRUDZINSKI | ACCOUNT EXECUTIVE AND ANALYTICS LEAD, COMMODITY & INGREDIENT HEDGING, LLC We are operating in one of the most historically expensive beef environments we’ve ever seen – and yet demand continues to hold together. Retail beef prices remain elevated, and beef maintains a significant premium over pork and poultry. Total protein consumption per capita is pushing toward a new all-time high in 2026 – roughly 227 pounds per person. Consumers are still buying protein, and importantly, they’re still choosing beef. That resilience matters. Beef spending as a percentage of total income has not surged in a way that signals demand exhaustion. After adjusting for inflation, consumers are absorbing historically high beef prices without a collapse in movement. That tells us something important – demand is not yet the weak link in this cycle. BEEF IS EXPENSIVE – AND STILL WINNING Beef is historically expensive relative to competing proteins. The price ratios vs. pork and poultry are nearing record territory. We should have seen substitution pressure intensify by now. Historically, pork chops and chicken breast were considered substitutes for ground beef. Today, ground beef is priced closer to bacon! In terms of minutes worked to buy a pound, ground beef continues to increase while pork chops and chicken breast decrease. This does not signal major substitution between beef and other proteins. Part of that story is quality. Grading improvements continue, with Choice and Prime percentages climbing again year over year. When more than 84 percent of cattle grade Choice or better, the product on the shelf is consistent and higher quality. Consumers are paying more for a better product. At the same time, imports are supplementing domestic supply, helping smooth availability without completely undermining price structure. Total protein availability is rising, yet beef’s share remains firm. THE CUTOUT AND MARGIN STRUCTURE Looking forward, comprehensive cutout values have room to strengthen seasonally. A move back toward $400 per hundredweight by summer 2026 is not unrealistic if middle meats firm and grilling demand materializes. But here’s where the story becomes more complex for producers. Packer margins have become more volatile since earlier in the cycle, moving more into the red. The leverage dynamic between feeder cattle and packers sits well above the 15-year average. Recently, cash has rallied while cutout remained relatively stable – a shift that benefits cattle feeders. Cattle feeding margins had the largest and longest run in 2025. Looking forward, margins are at a breakeven or Sirloin Steak 22.3 Ground Beef 10.9 Pork Chops 6.7 Bacon 11.3 Chicken Breast 6.7 5 10 15 20 25 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 Jan-24 Jan-26 Minutes Worked to Buy 1 Lb of Protein Sirloin Steak Ground Beef Pork Chops Bacon Chicken Breast 75% 80% 85% 90% -8% 2% 12% 22% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Slaughter Capacity % Packer Margin % Packer Margin % Vs Slaughter Capacity Perc Capacity Perc Capacity CONTINUED ON PAGE 42
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