Even the most bullish at heart must be impressed by the surge in cattle prices through August to repeated record high levels as buyers chase snugger supplies.

In fact, the sheer price height makes some on both sides of the trade understandably queasy, wondering when and how fast it might unravel. But, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University emphasizes the need to keep in mind the fundamental reasons for such high prices.

“Calf crops have declined the past seven years and are down 8.8% from the cyclical peak in 2018. The 2025 U.S. calf crop is the lowest since 1941,” Peel explains, in his late August market comments. “The beef cow herd is at a cyclical (maybe) and multi-decade low and is showing little sign of rebuilding. The closure of the Mexican border adds to the ever-tighter feeder cattle supply. The slow decrease in feedlot inventories in the past two years has, to some extent, masked the fact that feeder supplies were continuing to dwindle.”

Moreover, Peel notes auction receipts suggest more available calves are moving to market earlier than normal as producers seek to take advantage of current prices. In Oklahoma, for instance, he says auction receipts were 29.2% higher year over year during the previous four weeks. 

“Changing the timing of the fall run of calves may briefly mask the actual feeder supply situation in the country for a few weeks,” Peel says. He explains feedlot placements will likely be larger through the third quarter than otherwise would have been the case. However, he says feeder cattle volume in the fourth quarter will likely drop noticeably. 

“Stocker and feedlot buyers should not expect seasonally lower feeder prices this fall,” Peel says. “With still no indication of significant heifer retention, the implication is that tight feeder supplies must get tighter yet in order to begin the process that will lead to eventual herd rebuilding. Herd rebuilding is slow to start and appears to be slow-paced at this time. This suggests that cattle prices will move higher and remain elevated for an extended period of time with a peak that is still in the future.”

Feeder and fed prices projected higher

USDA’s Economic Research Service (ERS) projected feeder steer prices significantly higher, compared to the previous month, in the August Livestock, Dairy and Poultry Outlook.

Based on recent price strength and fewer cattle for feedlot placement than previously expected, forecast prices increased by $31 in the third and fourth quarters of this year to $343/cwt. and $345, respectively. The estimated annual average price for 2025 increased $15.50 to $316.79. Prices are basis Med. and Lrg. #1 steers weighing 700-850 lbs. selling at Oklahoma City.

Price expectations for next year increased even more. ERS raised estimated prices $41 in the first quarter of 2026 to $348 and by $38 in the second quarter to $350. Next year’s projected average price increased $38 to $350.25.

“With respect to the future number of placements that might be available in late 2025 and 2026, USDA National Agricultural Statistics Service provided an initial estimate of the 2025 calf crop in the mid-year Cattle report. The 2025 estimate is 33.1 million head, a decline of 1.3% from the 2024 calf crop,” ERS analysts say. “The year-over-year decline confirms that a smaller pool of calves will be available for either retention or placement in feedlots in 2025.”

The ERS also boosted expected fed steer prices in the August World Agricultural Supply and Demand Estimates.

Compared to the previous month, projected weighted average five-area direct fed steer prices increased $12 for the third quarter to $238/cwt. and $11 in the fourth quarter to $240 for an annual average price of $227.06, which was $5.75 higher.

That was with beef production for this year estimated to be 262 million pounds less (-1%) than the previous month at 25.9 billion pounds, based on reduced fed and non-fed cattle slaughter and lighter dressed weights. The total would be 1.1 billion pounds less (-3.9%) than last year).

For next year, compared to the previous month, projected fed steer prices increased $15 in the first quarter to $242 and $15 in the second quarter to $243. The estimated 2026 average fed steer price increased $15 to $244.

Trade wonderments pressure beef exports

U.S. beef exports remain hamstrung by ongoing confusion surrounding tariffs and the discussions surrounding them. Export volume in June was the least in five years, due in part to China’s failure to renew registrations for the vast majority of U.S. plants, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). 

Beef exports totaled 93,928 metric tons (mt) in June, down 15% from a year ago and the lowest since June 2020. Export value was $769 million, down 18% and the lowest in 17 months. Shipments to Korea and Mexico were steady with year-ago levels, while exports increased sharply to Central and South America and variety meat demand strengthened in Egypt and in several emerging markets in Africa. But these gains did not fully offset the steep decline in exports to China and lower shipments to Japan. Without exports to China, USMEF estimates the U.S. beef industry’s lost opportunity at $150 to $165 per head of fed slaughter, or about $4 billion annually.

“The June export results really underscore the urgent need to resolve this impasse with China,” says Dan Halstrom, USMEF president and CEO. “China’s tariff rate on U.S. beef is currently 32% – which is too high, but not insurmountable. The problem is, with only a few plants eligible to ship to China, the tariff rate becomes irrelevant. Consistent and transparent plant approvals, without expiration, were among the most important components of the 2020 Phase One Agreement with China, and it’s time for China to return to those commitments.”

Beef exports equated to $392.72 per head of fed slaughter in June, down 14% from a year ago (again, reflecting the absence of China). The January-June average was $410.00, down 2% from the first half of 2024.

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