Beef Prices Climb 15% Amid Shrinking Herds

- The U.S. cattle herd has shrunk to its smallest size in 75 years, with the total inventory falling to 86.2 million head as of January 2026. This continues a multi-year contraction, with the beef cow inventory specifically hitting its lowest level since 1961. - Persistent drought is a primary driver, degrading pasture conditions and devastating hay production, which is a key food source for cattle. This has been compounded by high input costs, as feed expenses can make up 75% of a cow-calf producer's operating costs. - These trends are part of a multi-year "cattle cycle," the industry's natural expansion and contraction phase. The current contraction phase has been prolonged due to unfavorable conditions, and herd rebuilding is a slow biological process; offspring from heifers born in 2024 would not enter the beef cow herd until 2027. - The price of corn, a primary feed grain, is inversely correlated with the value of feeder cattle; as grain prices rise, the cost to finish cattle increases, reducing what feedlots are willing to pay for young animals. While cattle prices are high, these elevated feed and operational costs limit the ability of ranchers to profit and reinvest in expansion. - The U.S. Department of Agriculture (USDA) forecasts that the trend of rising prices will continue, with wholesale beef prices projected to increase by 6.9% and farm-level cattle prices by 6.1% in 2026. - Consequently, the net beef supply per person is expected to decline. Projections show per capita beef consumption in the U.S. is anticipated to drop to 56.3 pounds in 2025, down from nearly 58 pounds in 2024, as tighter supplies and higher prices impact consumers. - To meet strong consumer demand, the U.S. has increased beef imports from countries like Australia and Brazil. Over the last four decades, imports have grown from supplying 10% of domestic beef consumption to approximately 22%.