REDFIELD, Iowa (DTN) -- The Nov. 21 announcement by Tyson Foods of the January 2026 closure of the beef processing plant in Lexington, Nebraska, and shift reduction at its Amarillo, Texas, plant has caused uncertainty in the market.

Oklahoma State University Extension livestock marketing specialist Derrell Peel said the industry fears what the impact of packer losses and low cattle numbers will do overall with these announcements.

"This will reduce industry slaughter capacity by roughly 7,000 to 8,000 head per day," Peel said. "The exact impact will depend on forthcoming details, especially how Tyson will manage a one-shift plant. Depending on the details, the reduction represents roughly 7.5%-9% total industry slaughter capacity."

The current cow herd shows the lowest numbers in nearly 70 years, and this could affect the rebuilding efforts.

DTN Livestock Analyst ShayLe Stewart said she believes the reduction of throughput will only push building back the herd that much further out, as yet another level of confidence has eroded from the market.

"Friday's Cattle on Feed report highlighted that fact, as the total number of heifers on feed for Oct. 1 totaled 4,355,000 head, which is still 38% of the total on-feed numbers," Stewart said. "And whenever heifers are at or above 37% of the total number of cattle on feed, the industry knows heifers are being sold as feeders and aren't being retained as replacement females."

(See the latest Cattle on Feed report at https://www.dtnpf.com/….)

SLAUGHTER RUNS LOWER

Peel pointed out that the 2025 daily fed slaughter runs are averaging 90,529 head per day for Monday to Friday, which is down 3.6% from the recent peak in 2022. Saturday slaughter has averaged 4,878 head this year, which is down considerably from the 37,137-head-per-day average in 2022.

"The Tyson planned reduction in packing capacity may be nearly (but not quite) enough to balance the decrease in cattle slaughter since the peak in 2022. However, fed slaughter is expected to continue decreasing in 2026 and 2027. Excess packing capacity will continue to be an issue for beef packers for the foreseeable future," he added.

Stewart said that while feeder cattle prices are still trading at record highs compared to recent years, the bullish sentiment that both the industry and market possessed three months ago isn't the same as it is today. And whenever shackle space is taken away, that's an alarming development for the cow-calf sector -- even if the cow herd sits at a historic low.

INDUSTRY ORGANIZATIONS REACT

Beef industry organizations are upset with the plant cutbacks as well. The Nebraska Cattlemen Board of Directors said they are disappointed in the announcement, especially with the recent USDA Cattle on Feed numbers showing Nebraska inventories slightly above year-ago levels. This would be due to an increase in the number of large feedlots in the state with the addition of Blackshirt Feeders located in southwest Nebraska.

"We firmly believe there isn't a better place to efficiently and economically raise cattle and produce beef than Nebraska," the board's statement said. "As this will have a profound impact on the community of Lexington and many cattle producers, we hope the plant will continue operations under new ownership."

National Cattlemen's Beef Association CEO Colin Woodall also stated his disappointment in the closure and cutback at the two plants.

"This raises concerns about the impact on family farmers and ranchers, but it is the unfortunate result of the industry experiencing excess processing capacity in the face of historically low cattle numbers," Woodall said. "We are closely monitoring this situation and are working to ensure the beef supply chain continues to function properly."

IMPACTS ARE SEEN FURTHER

The Lexington plant employs more than 3,000 people, and the Amarillo plant cuts will eliminate 1,700 jobs. Tyson said they will do what they can to move these employees to positions at other plants where they are needed and that other beef facilities will likely increase production to make up for the closure.

The recent opening of beef packing facilities in North Platte, Nebraska, and Wright City, Missouri, should also help take some of the burden off this announced change, but isn't the complete answer depending on where the beef supply comes from to these plants.

Bill Bullard, CEO of R-CALF USA, said that with the new packing facilities coming online and the underutilization of the Dakota City, Nebraska, plant, along with lower cattle supplies, this closure isn't as impactful as when Tyson's Holcomb, Kansas, plant was shut down because of a fire in 2019. The fire caused the plant to be temporarily shut down, leading to a backlog of the usual kill of 6,000 head per day for about four months.

"That said, Tyson is losing a major customer -- Walmart, which is working earnestly to develop a fully vertically integrated system from birth to plate, meaning it's working to chickenize the cattle and beef supply chain. The Tyson closure may be a response to this," Bullard added. "While Walmart may be initially viewed as providing more competition simply because it will be another potential buyer, this is exactly the wrong approach for the U.S. cattle industry."

Walmart made an equity investment in the Sustainable Beef plant in North Platte, which came online earlier this year. And in late June, Walmart announced the opening of its first-ever owned and operated case-ready beef facility in Olathe, Kansas.

For more details on the recent Tyson announcement, see https://www.dtnpf.com/….

Jennifer Carrico can be reached at jennifer.carrico@dtn.com

Follow her on social platform X @JennCattleGal

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