US Cattle Market Set for Slow Decline Amid Drought and Rising Costs

Cattle producers in the US can breathe a sigh of relief as the cattle market has crested its cyclical highs, but prices are expected to trend lower over the next two years. According to CattleFax, a historic drought continues to constrain pastures and feed supplies, with approximately 72% of the US beef cow herd situated in drought-affected areas in August.

The drought has led to poor pasture conditions, resulting in some producers culling cows or weaning calves early to ease grazing pressure. This has made them more cautious about retaining heifers, even as the industry looks toward rebuilding.

Rising feed and diesel costs are also putting pressure on feedyards and backgrounders, with corn futures consolidating between $5.25 and $5.45 per bushel. The cost of gain for central plains feedlots has jumped 10 to 15 cents since January to roughly $1.25 per pound.

Additionally, retail beef prices are meeting consumer resistance, with the USDA all-fresh beef retail price projected to average $9.60 per pound in 2026 before softening to around $9.25 per pound in 2027 as consumer demand normalizes.