US beef sector braces for another volatile year as cattle supply tightens
Herd contraction, import losses and slower slaughter weigh on the industry
26 May 2026
1 minute read
By: The US beef sector is heading into 2026 facing similar volatility to last year, with concerns over whether supply can meet consumer demand, according to CoBank's quarterly report. Producers navigated a difficult 2025 marked by the New World Screwworm outbreak shutting down live cattle imports from Mexico, beef processing closures and downsizing due to limited cattle supplies, and increased reliance on imports. Cattle prices at every production stage hit record highs, with cow-calf ranchers and feedlots posting strong profits while beef packers recorded record losses.
At the heart of the challenge is a shrinking cattle herd struggling to meet demand. The US beef cow inventory has declined by nearly 3.8 million head since peaking in 2019, with the steepest contractions in the Northern and Southern Plains. Poor pasture and forage conditions have been the main drivers, compounding the impact of reduced feeder cattle imports from Mexico and intensifying competition for cattle among feedlots and packers.
Federally inspected slaughter has slowed considerably in 2026 due to supply limitations and winter storms in the first quarter, falling 547,000 head or 7.9% year-to-date.
Feedlot margins are also under pressure. According to Iowa State's yearling-to-finish crush margin calculations, cattle entering feedlots in December and sold in May will net $350 per head, while those entering in March and sold in August are projected to lose $200 per head. Even as the herd begins to rebuild, prices are expected to remain elevated as fewer animals enter feedlots until supplies rebalance. CoBank says utilizing risk management and hedging to lock in revenue will be critical while the end of the current bull run remains uncertain.
