The formula for herd expansion may be simple — “grass plus profitability equals more cattle” — but the reality on the ground is anything but. CattleFax analyst Holden Ramey says nearly three‑quarters of the U.S. beef cow herd is currently in drought, sharply limiting the industry’s ability to rebuild numbers.
While profitability signals are strong, he says, dry pastures, high interest rates, costly inputs and market volatility are forcing many ranchers to delay or scale back heifer retention.
“We’re seeing some retention on a limited basis,” Ramey notes, “but it’s a slow, cautious rebuild, not a full‑throttle expansion.”
Ramey shared an outlook on the U.S. beef cattle cycle, herd dynamics, feed and grain markets, drought impacts, trade, demand and price expectations across the cattle and beef complex during the “Breakthrough Symposium: New World Screwworm Preparedness” on Friday in San Antonio, Texas.
His core message: supplies will stay historically tight, demand is exceptionally strong, expansion will be slow and cautious, and effective risk management is critical.
Here are seven key takeaways from Ramey’s presentation:
1. Slow, U‑Shaped Herd Rebuild – Tight Supplies for Years
Ramey predicts the beef cow herd is near its low for this cattle cycle, but the rebuild will be slow and cautious, not a sharp V‑recovery. Weather, high interest rates, input costs, aging producers and volatility are all dragging out expansion, even with strong prices.
He says calf and feeder supplies will stay tight, keeping markets in a higher trading range, even if the industry stops making new highs every year.
2. Drought Is the Biggest Brake on Expansion
About 75% of the U.S. beef cow herd is in drought, compared to a long‑term average near 20%. El Niño and a neutral pattern offer some relief ahead, but much of “cow country” is still in rough shape, limiting heifer retention and herd growth.
He predicts some producers who tried to hold heifers may be forced to “send them down the road” due to lack of feed.
3. Demand Is Exceptionally Strong Despite High Prices
He says since January 2020, the average price of ground beef has increased approximately 72% and retail beef is up approximately 61%, versus overall inflation up approximately 28%.
Ramey admits even with cheaper pork and poultry, there’s little evidence of major trade‑down away from beef — more trading down within beef (steaks to ground) than out of the category.
Higher grading — about 85% Choice and Prime, and approximately 20% Prime — plus the protein diet trends and GLP‑1‑driven nutrition advice have helped build durable beef demand.
4. Feed, Days on Feed and Carcass Weights Are Offsetting Fewer Head
Ramey says cheap corn supports longer feeding periods. On average, steers are averaging 190 to 200 days on feed. Simultaneously, average carcass weights increased 52 lb. in 2024 and 2025, which is equivalent to about 1.9 million head of added supply. Note: The long-term average of carcass weight increase historically has been 5 lb. per year.
He explains this means the rally is as much demand‑driven as supply‑driven — not the tightest tonnage ever, but prices are still very strong.
5. Trade Shifts: Mexico, Canada and Boxed Beef Flows
He says the screwworm‑related closure of the Mexican border in 2025 slashed imports from approximately 1 million head to around 200,000, significantly tightening U.S. feeder supplies.
Even if the border reopens, Ramey does not expect a quick return to 1‑million‑head years due to health protocols and more feeding capacity in Mexico.
He also says exports are down and imports up, as tight U.S. supplies and high prices draw more product in and keep more domestic beef at home.
6. Leverage and Profitability Have Shifted Toward Producers
After the COVID/packing bottleneck era, the industry now has more slaughter capacity than cattle, so leverage has swung away from packers. Fed cattle’s share of the cutout has rebounded to around 59%, versus the low 40s during COVID.
He reports the total industry profitability is near $690 per head to be shared across sectors, with cow‑calf and stocker operators capturing a big share.
7. Price Outlook: High Plateau Now, Eventual Downside Later
For 2026, Ramey predicts fed steers will mostly be $240 to $250, potential spike to $250 to $255 in late spring/early summer, then softer into $230 to $235 in Q4.
Feeders and calves stay historically high but could see modest pullbacks later in the year, likely smaller than the average 12% seasonal break because supplies are so tight.
He says the CattleFax team expects slightly softer prices next year across cutout, fats, feeders and calves — but still elevated versus history.
Longer term, after this huge up‑cycle — up approximately 200% for calves — Ramey warns of roughly 25% downside risk across fed, feeder and calves sometime later in the 2020s or early 2030s, making risk management critical while times are good.
His message to producers was both optimistic and cautionary. Tight cattle numbers, exceptional beef demand and renewed leverage at the ranch and feedyard suggest that today’s strong prices are not a fleeting windfall, but part of a higher trading range that could persist for years.
At the same time, Ramey warns, drought, high costs, shifting trade flows and the inevitability of the next down‑cycle mean this phase of the market must be treated as an opportunity to shore up balance sheets, invest wisely and lock in margins where possible. The fundamentals may be on the cattle industry’s side, he stresses, but capturing the full benefit of this rare window will depend on how aggressively producers manage both production and price risk in the months ahead.
