For cattle producers trying to read this market, the signals can feel all over the board: a closed Mexican border, challenging animal health threats — screwworm and Asian longhorned ticks, wide basis and a fed cattle futures market under heavy pressure, even as the cash trade holds firm.
Derrell Peel, Oklahoma State University Extension livestock marketing specialist, says underneath all the noise, the story is actually straightforward — and still fundamentally bullish for producers.
“The fundamentals haven’t changed,” Peel stressed on AgriTalk July 9 with Chip Flory. “The cash market may give up a little bit seasonally, but I suspect in the end the futures market will come back to the cash.”
Futures Pressure Doesn’t Match Reality
While cash cattle and beef demand hold together, fed cattle futures have come under sharp pressure. Peel ties that to trader psychology in a long, record-price bull run, not a collapse in fundamentals.
“We’ve been in a very strong bull market for so long,” he explains. “We’ve been at record prices, and so you know markets get nervous when you’re near the top.”
Layer in seasonal summer expectations and the urge to take profits, and you get the kind of selloff the market has seen.
“I think a lot of the traders in that futures market are either very worried about the possibility that at some point we run out of runway on this thing,” Peel says, “and the other thing is with a continuing bull market, they’re always looking for an opportunity for correction and taking a little money off the table.”
For producers evaluating risk management, he notes the board hasn’t offered much in the way of guaranteed profit. Peel confirms hedging feeder cattle purchases against live cattle futures for next year offers no clear margin.
“There’s no futures market opportunity, to a large extent,” Peel explains. “If you back it up one level at the feeder cattle level, it’s been kind of the same story there most of the time.”
Herd Numbers Point to Years of Tight Supply
Behind the volatility sits a supply story that isn’t changing anytime soon. The most important piece of Peel’s big-picture view is the long-term cattle supply story. The U.S. beef cow herd has shrunk year after year — and the impact is still working its way through the system. Peel says 2026 is on pace to produce the smallest calf crop in nine consecutive years of decline, and the U.S. cow herd may not have bottomed out until January 2026 — a number that won’t be confirmed until next year’s data comes in.
“We don’t have any prospects for more feeder cattle coming into feedlots for the foreseeable future,” Peel says. “We’re talking not only through the rest of 2026 but through 2027 and very probably into 2028 with tighter supplies, because we still haven’t effectively held back enough heifers to do any herd growth that amounts to anything.”
That tightening supply, paired with the continued shutdown of Cargill’s beef processing plant in Fort Morgan, Colo., is squeezing margins across the chain — and Peel expects retailers to feel it next.
“I anticipate before this thing is all over that retailers are going to see more margin squeeze than they have,” he says, noting packers have already absorbed the brunt of adverse conditions over the past two years.
Mexico Border: A Structural Shift in the Making
Peel says his first concern isn’t the next 30 days — it’s what happens if the Mexican border stays closed long enough to permanently alter feeder flows. Mexico has quietly built out its own feedlot and packing capacity while still shipping feeders north.
“The Mexican beef market has continued to evolve significantly over the last 15 to 20 years,” Peel explains. “They do have more infrastructure, I think, than a lot of people really appreciate.”
Peel says U.S. feedlot demand for Mexican feeder cattle remains strong and would show up immediately if the border reopens, which should help rebalance the artificial price gap that’s built up between the two markets.
“There is no doubt that the demand will be there if we do open the border,” he summarizes.
Historically, those Mexican feeders have been a given for southern U.S. yards. But that assumption is now in play.
“If it stays closed for an extended period of time,” he adds, “there is a risk at some point that they get used to doing that, and you know, maybe they become a little less reliant on those exports than they have been historically for multiple, multiple decades.”
From Peel’s standpoint, economically, the system is ready to reopen the border.
“From an economic standpoint, I think we can do it, and the market will handle it just fine,” he stresses.
The longer the closure drags on, however, the higher the odds that more of those calves stay home in Mexico — and don’t come back into the U.S. supply picture at all.
Skeptical of Processor Support Program
Peel was direct in his assessment of the Trump administration’s proposed support program for small and mid-sized meat processors, calling it politically motivated and unlikely to move the needle for producers or consumers.
“It won’t effectively help that industry, it won’t help consumers, it won’t help the rest of the cattle industry,” Peel says. “It’s just kind of playing headlines, as near as I can tell.”
The Next Squeeze: Why Retailers Can’t Dodge Tighter Beef Supplies Forever
President Trump’s mention of Walmart lowering beef prices may grab headlines, but Peel sees a deeper shift coming. After a prolonged period of adverse margins above the cow-calf level, he expects retailers to face more pressure.
“Before this thing is all over,” Peel says, “retailers are going to see more margin squeeze,” noting tighter beef supplies will eventually force stores to adjust margins “when the market forces them to do that.”
Retailers like Walmart may eventually face margin pressure as tight cattle and beef supplies work their way up the chain, even if short-term price moves are politically charged.
For producers, the long view may matter more than any single week of trading or policy headlines. Whether the topic is Mexican feeder flows, disease protocols, retail margins or futures volatility, Peel keeps coming back to the same anchor: There simply aren’t more cattle coming any time soon.
