The fundamentals of the current stage of the cattle cycle have not changed: tight supplies, strong demand, and slow expansion efforts, said University of Arkansas Extension Beef and Forage Economist Hannah Baker, in a Livestock Marketing Information Center letter called In The Cattle Markets.
MARKET DATA
Previous LMIC articles discussed the importance of remembering these fundamentals amid the chaos of not having market data and reports to support them, Baker said.
According to the World Agricultural Supply and Demand Estimates report, forecasts for beef production in 2025 and 2026 were lowered because of declining fed cattle slaughter, she said. Beef production in 2025 was projected to reach 25.7 billion pounds, down 70 million, or 0.3%, from the September projection and down 1.2 billion, or 4.5%, 2024 beef production.
Compared with the new projection, 2026 beef production was projected to decline by 366 million pounds, or 1.4%, to 25.3 billion pounds, Baker said.
The current beef-production decline resulted from herd liquidation that started in 2019, she said. This resulted in a short-term increase in beef production as more cattle were being sold for beef production.
However, the US cattle herd now is the smallest it has been since 1951, consisting of 86.7 million head with 27.9 million beef cattle, Baker said. Feeder cattle supplies are estimated at 24.5 million head, the smallest in available data.
As cattle supplies continued to decrease, beef production followed suit, Baker said. With limited fed and non-fed supplies, future beef production will decline while the domestic cattle herd tries to rebuild over the next several years.
FED STEER PRICES
Average fed steer prices were projected to be $234 per cwt for the last quarter of 2025, 24%, or $45 per cwt, more than the last quarter of 2024, she said. For 2026, the projected average annual price for fed steers was projected to reach $246 per cwt. These projections point to the fundamental reality of tighter supplies heading into the end of this year and into 2026.
As expansion approaches, more heifers will be placed into the breeding herd rather than into feedlots, further limiting beef production, she said. Over time, calves raised by those retained heifers will contribute to increasing beef production.
There is heavy emphasis on “time,” Baker said. Calves raised by retained heifers this fall will not enter beef production until 2028-2029. With few signs of heifer retention this year, this is the earliest increased in beef production could be seen.
As of July, the percentage of heifers on feed was 38.1%, she said. During the last expansion, this percentage was in the lower thirties.
High prices will incentivize rebuilding eventually, meaning fewer heifers entering the market, resulting in peak cattle prices, Baker said. As cattle numbers increase, beef production will increase, and cattle and beef prices will decrease.
Expansion efforts will depend on higher cattle prices, future profitability and forage availability, she said. The reality of consumers balking at the meat counter is still a real concern that could influence beef and cattle prices, but so far, this has not been the case.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $219.68 per cwt to $219.70, compared with last week’s range of $216.36 to $228.00 per cwt. FOB dressed steers and heifers went for $338.10 per cwt to $343.56, compared with $345.25 to $356.88.
The USDA choice cutout Friday was up $2.07 per cwt at $368.89 while select was up $6.83 at $357.88. The choice/select spread narrowed to $11.01 from $15.77 with 80 loads of fabricated product and 13 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $399.58 per cwt, and 50% beef was $172.28.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.05 to $1.20 a bushel over the Dec corn contract, which settled at $4.32 3/4, down $0.02 3/4.
The CME Feeder Cattle Index for the seven days ended Friday was $319.70 per cwt, up $0.94. This compares with Monday’s Jan contract settlement of $321.07, down $2.90.