Fundamental supply and demand strength continues for cattle and beef markets, albeit with outside forces pressuring prices in recent weeks. Much of it is tied to volatile Cattle futures shoved around by uncertainty about the strike at the JBS packing plant in Greeley, Colorado and concerns about the wider potential economic impact of the U.S.-Israel attack on Iran.

For perspective on the latter, spot April WTI Crude Oil futures (CME) rocketed $28.71 per barrel higher (43%) between Feb. 27 and March 12, as shipping traffic through the Strait of Hormuz slowed to a near halt. The Dow Jones Industrial Average lost 2,419 points as investors fretted over escalating inflation and slower economic growth. During the same period, the CME Feeder Cattle Index was down $13.47, and the five-area direct weighted average FOB live fed steer price lost about $10 per hundredweight (cwt.).

Ahead of the U.S. attack on Iran, USDA’s Economic Research Service (ERS) increased the expected feeder steer price (750-800 lbs., Oklahoma City) in the February Livestock, Dairy and  Poultry Outlook.

Compared to the previous month, for Medium and Large #1 steers weighing 750-800 lbs. and trading at Oklahoma City, the ERS increased prices $11 in the first quarter to $363/cwt., $8 in the second quarter to $363, $4 in the third quarter to $363 and $6 in the fourth quarter to $368. The annual average price increased $7.25 to $364.25.

“Despite higher-than-expected supplies of cattle available for placement in 2026, based on the January Cattle report, supplies overall remain very tight,” according to ERS analysts.

The ERS also increased expected five-area direct weighted average fed steer prices for most of 2026 in the March World Agricultural Supply and Demand Estimates.

Compared to the previous month, based on recent prices and continued strong demand, prices increased $2 in the first quarter to $240/cwt., $3 in the second quarter to $241 and $2 in the third quarter to $242. The fourth-quarter price was unchanged at $245. The annual average price increased $2 to $240.

This year’s beef production was estimated 110 million pounds less than the previous month at 25.8 billion pounds. Estimated beef production would be 191 million pounds less (-0.7%) than last year.

“Beef production is forecast lower on the slower-than-expected pace of slaughter through early March, partially offset by heavier dressed weights,” say ERS analysts.

Expansion headwinds

Even without recent outside pressures, continuing drought and the threat of drought will likely make producers cautious about aggressive herd expansion in major beef cow states, where the majority of herd liquidation has occurred, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his early-March market comments.

Compared to the recent peak in 2019, Peel explains the national beef cow herd at the beginning of this year was 4.03 million head less (-12.7%) at 27.61 million head.

“A proportionally larger share of herd liquidation has occurred in the heart of beef cow production regions,” Peel says.  “In 2019, 13 states in the middle of the country accounted for 64.6% of the total herd but by 2026, the share had dropped to 63.1%. The herd-inventory change in these 13 states in the past seven years totaled 3.0 million head, 74.3% of the total herd decrease.”

Beside drought concerns, Peel says changes in crop production and land use could pose expansion challenges in some areas. 

“From 2019 to 2025, corn and soybean planted acreage in the U.S. increased by 8.6%, an increase of 14.2 million acres,” Peel explains. “In South Dakota, planted crop acreage increased by 3.38 million acres, up 24.5% from 2019 to 2026, with corn and soybean acreage up by 52.2%. Simultaneously, hay acreage in the state decreased by 710 thousand acres.”

Along with South Dakota, Peel says it appears increased crop production is likely to limit herd rebuilding in the Midwest and eastern regions of Great Plains states, including Kansas, Nebraska and North Dakota.  

In the meantime, USDA provided the first glimpse of crop planting expectations for this year at its recent Agricultural Outlook Forum. Analysts project acres planted to corn and soybeans to decline 1.3 million acres to 224 million. Forecast corn acres of 94 million acres would be 4.8 million acres less than last year and wheat acres of 45 million would be 300,000 acres less. Projected soybean acres of 85 million would be 3.8 million acres more.

For the 2026-27 crop year, USDA projects season-average prices received by farmers to be 10¢ higher for corn at $4.20 per bushel and wheat prices to be slightly higher at $5 per bushel. Soybean price was estimated marginally higher at $10.30 per bushel.

U.S. beef exports remain critical

U.S. beef exports continue to show resilience, despite the lack of access to Chinese markets, according to the latest data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). 

Beef exports in January totaled 92,558 metric tons (mt) in January, down 10% year-over-year. However, value fell just 3% to $780.1 million, as exports have commanded higher prices. Still, prices are not being maximized to the degree that would be possible with China back in the mix. When excluding China from the January results, exports increased 5% in volume and climbed 16% in value. January beef shipments trended higher year-over-year to Korea, Japan, Taiwan, the Caribbean, the ASEAN and South America, with export value also increasing to Mexico, Canada and Central America.

Beef export value per head of fed slaughter in January was more than $415, the highest since March and reflecting solid demand in other markets. 

Beef variety meat exports in January increased 6% year over year to 27,511 mt, the most in more than four years. Beef variety meat export value soared 46% to a record $126 million.

“Beef variety meat value reaching new heights for the second consecutive month is great news for cattle producers and for the entire supply chain,” says Dan Halstrom, USMEF president and CEO. “With cattle numbers being tight, it is more critical than ever to maximize the value of every animal. And while much of this export growth was driven by tongues and skirts going to Japan, demand was strong in a wide range of markets.”