Consumer demand remains relentless, producer opportunity offered mixed signals

Brian Earnest and Abbi Prins

April 8, 2026

Key Points

• Meat and poultry products continue to resonate with consumers. Demand, especially for beef, remains exceptional, prompting optimism for the protein sector.
• Feed costs remain a favorable tailwind for the animal protein space. However, cattle feeders are beginning to feel an outsized impact of further herd contraction.
• U.S. hog margins remain firmly in the black. ISU estimates are positive for the 23rd consecutive month as of the end of February.
• Broiler markets are under pressure as ample supplies of meat and slow-moving markets form a headwind to margins nearby. The coming months are poised for more chicken features and promotions, however.

Animal protein demand remains exceptional

The brightest spot in the animal protein segment over the past couple of years has been consumer demand. Americans are still overwhelmingly choosing protein as retail meat department dollar sales were up 6.8% and unit sales were 2% higher for the 52 weeks ending January 2026, according to Circana sales data.

Even though retail sales have picked up, consumers are still spending more money to eat out. When accounting for inflation, food away from home expenditures averaged $349 per month per capita during 2025, up $10 from 2024. This compares to just $263 for monthly food “at home” expenditures, which was $3 higher YoY.

Labor cost at the foodservice level is one of the largest contributors for the jump in the food away from home metric. As labor and other necessary input costs became more expensive, menu prices had to reflect the changes. More quick-service restaurants (QSRs) are featuring chicken items over hamburgers or beef to help keep margins afloat alongside all other rising costs.

Despite a more favorable feed cost environment and strong consumer demand, the animal protein herd and flock size of total grain-consuming animal units has stabilized at 100 million animal units over the past four years. Since the peak in 2019 at nearly 102 million animal units, cattle on feed has been the primary sector losing animals, however this has been slightly offset with growth in hogs and poultry. Overall, we aren’t expecting the U.S. livestock animal inventory to change drastically over the next few years as cattle herd growth will occur slowly and markets need to evolve as more meat production becomes available across all the proteins.

Beef

After a tumultuous 2025, this year is expected to come with similar volatility levels and concerns over whether the beef sector is prepared to fundamentally fulfill consumer demand. Producers faced numerous challenges last year including New World Screwworm shutting down live cattle imports from Mexico, announcements of beef processing closures or downsizing shifts due to limited cattle supplies, and increased reliance on imports, just to name a few. On top of these measures, cattle prices in every production stage hit record highs, with profitability heavily in favor of cow-calf ranchers and feedlots, and record losses for beef packers.

What this boils down to is restricted cattle supplies trying to deliver enough to meet demand and asking where the next generations of cattle will be raised. Beef cow inventory peaked most recently in 2019. Since then, the total beef cow herd has declined by nearly 3.8 million head. But the contraction has been more robust in the Northern and Southern Plains than any other region in the U.S. Essentially, this is the middle-third of the country.

Poor pasture conditions and weak forage conditions have been the main drivers, limiting cattle availability, which is compounding the role that decreased feeder cattle imports from Mexico is adding to the market, ultimately increasing the competition for cattle in feedlots and for packers. Even more so, federally inspected slaughter has slowed considerably in 2026 due to supply limitations and winter storms in the first quarter. Federally inspected slaughter is down 547,000 head or 7.9% year-to-date.

The squeeze of record high feeder and lagging fed cattle values is beginning to drag on cattle feeders’ margins. According to Iowa State’s yearling-to-finish crush margin calculations, cattle entering feedlots in December and sold in May will net $350 per head, whereas those entering in March and sold in August are projected to lose $200 per head. Even when the herd starts rebuilding, higher prices for cattle are still expected as fewer animals will enter feedlots until cattle supplies balance out. In the meantime, utilizing risk management and hedging to lock in revenue and protect against falling prices is critical during this era where the end of the bull run is unknown.

Pork

China has largely pulled back as a major importer of U.S. pork, instead becoming nearly 100% self-sufficient for its domestic pork needs since the outbreak of African Swine Fever in 2019. U.S. producers continue to focus on both export opportunities outside of China and domestic market development after the pullback of Chinese purchases. During 2025 exports accounted for 25% of pork produced in the U.S., and 40% of U.S. pork was exported to Mexico, our No. 1 customer.

A recent Farm Journal article suggests that the new pork campaign “Taste What Pork Can Do” is working. The campaign, focused on new flavors and opportunities to serve consumer needs, returned $83 in retail sales for every $1 of Checkoff investment through December 2025, according to Numerator. This investment in redesigning pork for domestic markets seems straight out of the beef playbook, which if successful, could lead to long-term structural support for pork. USMCA continues to serve as a catalyst for U.S. pork exports to Mexico amidst foreign trade affair issues elsewhere.

With U.S. pork finding favorable market conditions both at home and its closest trade allies, domestic hog and pork markets have remained in much better shape for producers compared to years prior. Iowa State University estimates suggest February marked the 23rd consecutive profitable month for farrow-to-finish margins. Domestic hog values were up about $10 per head YoY through mid-March. We expect market improvements will remain encouraging to producers in the months ahead. However, the U.S. pork sector remains less isolated than the other animal protein sectors from global market conditions, suggesting risk remains elevated.

Poultry

A stockpile of U.S. corn continues to benefit animal feeders, specifically the U.S. broiler segment, the animal protein sector with the quickest production cycle. However, even with feed costs sitting about 20% below year ago levels to end 2025, broiler production costs at the end of 2025 were still 10% to 15% higher than pre-COVID-19 inflation-era levels.

These higher costs have kept the industry laser-focused on efficiencies. The broiler hatchery supply flock was down 2% YoY in February, yet eggs hatched were up 2% YoY from the productive flock during January. This highlights just one of the areas where data tells us the industry is continually working towards doing more with less.

With these improved efficiencies, broiler slaughter totals are running about 4% higher than the same period a year earlier through the first 10 weeks of 2026. Despite these improvements, flock health, hatchability and mortality continue to be concerns, and we expect these challenges to dampen broiler output growth prospects in 2026.

Processor margins were exceptionally strong for the first half of 2025 as a result of favorable feed costs and historically strong broiler meat prices. But during the fourth quarter, oversupply issues resulted in softening broiler values. Winter storms and rising liveweights have contributed to excess market availability and the market has yet to regain composure. Breast meat values have remained unseasonably flat at about $1.50 per lb. – 15% below last year’s annual average as of late. While margins have been pressured in recent months, the lower values are expected to spur marketing for chicken features in both the restaurant and grocery segments for spring and summer.