Derrell S. Peel, Oklahoma State University
Cattle and beef markets are poised to continue the path of the past few years in 2026. Despite turbulence in the fourth quarter of 2025, cattle markets ended the year strong. Tight cattle supplies, decreased beef production, and strong demand continue to support and elevate cattle and beef prices. Multi-decade lows in cattle inventories are the driving supply force that underpins cattle markets and the market is focused on the cow-calf sector, which holds the key to cattle supplies going forward. The rest of the cattle industry above the cow-calf sector will take their cues from cow-calf producers regarding cattle supplies in 2026 and beyond. Cow-calf producers have a number of factors to consider in the coming year.
Listen to the Market – The job of markets is to provide price signals to help producers allocate and use resources to produce products to meet market demands. In the case of cattle markets, price signals indicate what to produce, how much to produce and how resources should be used for that production. Record high calf prices and cow-calf returns is the market’s way of strongly encouraging increased calf production. Moreover, production resources, especially forage resources, should focus on calf production over alternatives such as backgrounding/stocker production. Cheap corn further emphasizes this, encouraging calf production in the country with feedlot placement at relatively lighter weights and finishing as quickly as possible.
Maintain Herd Productivity – A top priority for cow-calf producers is to maintain the productivity of the beef cow herd. Three years of declining beef cow slaughter has pulled the beef herd culling rate down to the lowest level in a decade. The net culling rate for the beef cow herd in 2025 is project to be less than 8.4 percent. The average net culling rate for the last 30 years is 10 percent. Low culling rates have allowed producers to sell more heifers in the last three years, but additional heifer retention is needed going forward just to maintain the productivity of the current low cow inventory
Herd Growth? – Beyond keeping enough heifers to maintain the herd, some producers have further considerations about additional heifer retention to increase herd inventories. Conditions vary widely regarding pasture recovery from previous drought, current status of pastures, expectations/concerns about future forage conditions. Nevertheless, strong calf prices and the slow pace of market response thus far to high prices likely means that more producers are considering some level of restocking and herd growth.
Manage Costs – Profit maximization means managing costs as well as increasing revenue. While current calf prices are generating record high per head revenues, complacency about cost management means that producers are not taking full advantage of the current opportunity to maximize profits and build equity. Harvested and purchased feeds are the largest part of annual cow cost of production. Now is a good time to develop grazing plans for forage use and minimizing harvested and purchased feed needs in the coming year.
Manage Risk – Despite a general bullish market environment, cattle markets will continue to be subject to considerable uncertainty and market volatility. Most of the market shocks that occur are likely to be short-lived. Having the flexibility to adjust marketing plans by a few days or a few weeks can help to avoid brief market dips. Additionally, producers can consider risk management tools to provide downside risk protection for planned marketing windows. These include LRP insurance or futures options. Higher average prices are expected so leaving the upside open is important.
