CattleFax Outlook: 7 Key Market Drivers Shaping Cow-Calf Profits into 2027

The cattle market has officially crested its cyclical highs, but producers bracing for a repeat of the steep 2015 to 2016 cliff can breathe a cautious sigh of relief. According to CattleFax, while calf and fed cattle prices will trend lower over the next two years, an unusually slow and steady herd expansion — hampered by forage deficits and high replacement costs — will keep cow-calf operations in profitable territory.

Here are seven takeaways from the CattleFax Cow-Calf Trends+ Webinar Sept. 23, 2026, hosted by Analysts Matthew McQuagge and Joseph Vasseur:

1. Historic Drought Continues to Constrain Pastures and Feed Supplies

Drought remains the primary operational roadblock across cow-calf country. McQuagge stresses approximately 72% of the U.S. beef cow herd was situated in drought-affected areas in August, bringing the year-to-date average to roughly 69%.

“This is the worst first eight months of the year, really in the last 75 years that this data set goes back,” McQuagge emphasizes. “So [it’s] been a huge challenge to cattle producers and not just cattle operations, but also our grain and hay producing states.”

While a developing “super strong” El Niño is forecast to deliver fall and winter precipitation, pasture and range condition indexes sit near 30-year lows — trailing only 2012. The lingering dry weather has cut the national hay crop by roughly 10 million tons year-over-year. U.S. average all-hay prices hit $184/ton in July, with alfalfa at $203/ton (and upside potential to $210 to $220/ton this fall) and other hay averaging $143/ton (with risk up to $150 to $160/ton).

Poor pasture conditions have also led some producers to cull cows or wean calves early to ease grazing pressure. McQuagge says those conditions could make producers more cautious about retaining heifers, even as the industry looks toward rebuilding.

2. Rising Feed and Diesel Costs Widen Feeding and Freight Discounts

Corn and energy markets are delivering a double-squeeze on feedyards and backgrounders:

• Corn Tightness: A reduced U.S. corn yield estimate (178.5 bu/acre) has lowered the stocks-to-use ratio to 9.7%, consolidating corn futures between $5.25 and $5.45/bu. (with risk toward $5.75 to $6 if yields degrade further).
• Cost of Gain: Central Plains feedlot cost of gain (COG) has jumped 10 to 15 cents since January to roughly $1.25/lb.
• Freight Penalties: Rising diesel prices have pushed cattle freight up by $1 to $1.50 per loaded mile, steepening location discounts for cattle located far from major feeding centers.

“If you’re a cattle feeder, we do recommend owning corn whenever the market gives you an opportunity to do so,” McQuagge stresses.

3. Retail Beef Prices Meet Resistance as Consumers “Trade Down” to Grind

After months of strong margins, retail beef prices are running into consumer resistance. The USDA all-fresh beef retail price is projected to average $9.60/lb. in 2026 before softening to around $9.25/lb. in 2027 as consumer demand normalizes.

“Over the last eight [to] nine months we’ve been in pretty much a 25-cent trading range,” McQuagge explains. “That tells us that we’re bumping our head on the ceiling, and we’re likely at that point where we’re not going to be able to go out and demand a higher price from the consumer.”

Faced with 3.4% CPI inflation and higher interest rates, shoppers are altering their purchasing habits:

• Ground beef now accounts for roughly 57% of total domestic beef consumption.
• Wholesale middle meats (steaks) are showing demand fatigue, while demand for lean trimmings and non-fed beef remains exceptionally firm.

4. Tariff-Rate Quota Adjustments Inject Volatility into the Cutout

U.S. beef imports are forecast to rise 16% year-over-year from 2025.

Market volatility surged following the administration’s announcement to temporarily eliminate tariff-rate quotas (TRQ) for the “Others” beef-import category (primarily Brazil, along with Paraguay and Nicaragua) for September through November. The rule allows up to 100,000 metric tons (220 million lb.) per month out-of-quota.

While Brazil was already shipping approximately 150 million lb. monthly under tariffs, CattleFax estimates actual import volume could expand by an additional 50 to 75 million lb. per month in October and November.

“If we brought in an additional 70 million lb. per month beyond what they were already forecast to send us, that would have anywhere from a $5 to $10 impact on fed cattle markets and a $10 to $20 impact on the cutout,” McQuagge estimates, advising producers to brace for choppy futures trade as the market digests actual import totals.

5. Mexican Feeder Cattle Imports Resume Across Key Ports of Entry

After being largely shut down since November 2024, cross-border cattle trade with Mexico is gaining momentum, providing an additional supply pipeline for U.S. feedyards.

• Douglas, Ariz.: Reopened in late August, with weekly crossings recently surpassing Q4 2024 averages.
• Santa Teresa, N.M.: Representing approximately 40% of pre-closure volume opened in late September, targeting an average of 11,000 head/week.
• Columbus, N.M.: Scheduled to reopen in October, the port accounts for 11% of historical imports.

Vasseur projects Mexican feeder cattle imports to reach 150,000 to 200,000 head in 2026, expanding to roughly 800,000 head in 2027 if ports maintain steady operations.

6. Herd Rebuilding Will Be Much Slower and Flatter Than 2014 to 2015

U.S. cattle inventory is currently at its cyclical low, sitting just below 90 million head. While beef cow inventories are expected to increase by 300,000 head in 2027, Vasseur emphasizes expansion will look vastly different from the aggressive herd building seen a decade ago.

“This is going to be much more slower than the 2014 to 2015 cycle because we haven’t built that backlog of heifers, and we’re not just going to see a glut of supply show up right away,” Vasseur says.

Supporting supply dynamics:

• Beef Cow Slaughter: Bottoming in 2026 (down approximately 300,000 head year-over-year) and projected to increase by 600,000 head in 2027 as culling resumes a more normal pace.
• Carcass Weights: On pace for a 20-lb. year-over-year increase, driven by feedyard profit incentives to push out-weights higher.
• Beef Production: Commercial beef production is expected to bottom this year before increasing by 900 million lb. in 2027.

Vasseur stresses the herd expansion formula requires grass and money.

7. Price Outlook: Leverage Shifts, but Margins Remain Favorable

While cattle prices have crested their cyclical peak, structural supply tightness and delayed heifer retention will prevent a drastic market crash.

“The broader price trend is down, but is expected to be more stable than previous cycles,” Vasseur concludes. “A slower expansion will mean prices are not as directional as previous cycles. Current calf prices should still create profitable opportunities in the cow-calf sector.”

CattleFax Price Projections Summary:

Note: For bred females, Vasseur points out that as calf prices soften, the number of calves required to pay for a replacement female will increase for the first time this cycle heading into 2027.