USDA Raises Cattle Price Outlook as Tight Supplies and Drought Slow Herd Rebuild

Despite near-record cattle prices, widespread drought is complicating efforts to rebuild the nation’s cow herd.

NASHVILLE, TENN. (RFD NEWS) — The U.S. Department of Agriculture (USDA) is forecasting continued strength in cattle prices after lowering its beef production outlook and raising steer price projections through 2027.

In its July Livestock, Dairy and Poultry Outlook, USDA reduced its beef production forecast, citing fewer steer and heifer slaughter numbers this year as well as lower cattle placements that are expected to tighten supplies into next year.

World Agricultural Outlook Board Chair Mark Jekanowski said the supply situation continues to support higher prices.

“We raised our steer price forecast for 2026 by 94 cents per hundredweight. Now it is at $251.10 per hundredweight, and we expect that strength to continue into 2027, given the tight supplies,” Jekanowski said. “That price forecast was raised by 50 cents per hundredweight to $254.25.”

Despite near-record cattle prices, widespread drought is complicating efforts to rebuild the nation’s cow herd.

According to USDA, about 46 percent of the U.S. cattle inventory is currently located in drought-affected areas, up sharply from just 16 percent at the same time last year. While strong market prices encourage producers to retain heifers for breeding, limited pasture conditions and rising feed costs may instead force some operations to continue culling cattle.

Heat Stress Remains a Summer Concern

As hot weather persists across much of farm country, livestock specialists are reminding producers to take proactive steps to reduce heat stress in their herds.

A University of Nebraska livestock specialist said preparation should include multiple management practices rather than relying on a single solution.

“The plan here is to be ready with shades, to be ready with sprinklers, to be ready with bedding,” the specialist said. “It’s a very comprehensive approach, which in many cases we need to start thinking about this very early on.”

Experts also recommend maintaining good airflow and implementing effective fly control to help keep livestock healthy and productive during periods of extreme summer heat.

Feedlot Profits Fade as Cattle Costs Keep Rising

Kansas feedlots posted strong early-summer returns, but projected profits turn sharply negative as feeder cattle prices and feeding costs climb. Kansas State University economist Glynn Tonsor says current projections show a rapid shift from large June gains to losses later this year.

June steer closeouts are projected at a profit of $485.52 per head, while heifers are estimated at $277.88. July steer returns fall to $24.92, and heifer returns move to a loss of $107.83 per head.

Losses deepen through fall. Steer closeouts are projected at negative $323.52 in September and negative $344.76 in October. Heifer losses reach negative $312.52 in October as weaker fed-cattle prices collide with expensive placements.

The outlook assumes cash-market sales without price-risk management. Actual results will vary with feed efficiency, purchase prices, basis, performance, and individual marketing strategies.

Feeders will compare projected break-evens with their own costs before placing cattle. Risk management, disciplined bidding, and tighter performance control may become increasingly important as margins deteriorate.

Farm-Level Takeaway: Strong current feedlot profits could quickly disappear as feeder cattle and gain costs remain elevated.
Tony St. James, RFD News Markets Specialist

The USDA’s next Cattle-on-Feed report is scheduled for release on Friday and expected to provide a clearer picture of whether herd expansion is beginning or if drought conditions continue to delay rebuilding efforts.

Tony St. James joined the RFD-TV talent team in August 2024, bringing a wealth of experience and a fresh perspective to RFD-TV and Rural Radio Channel 147 Sirius XM. In addition to his role as Market Specialist (collaborating with Scott “The Cow Guy” Shellady to provide radio and TV audiences with the latest updates on ag commodity markets), he hosts “Rural America Live” and serves as talent for trade shows.

LATEST STORIES BY THIS AUTHOR:

Rollins acknowledged that supplemental assistance and bridge payments are helping farmers stay afloat, but said the industry needs broader reforms.
Cotton remained on the agenda as WTO members failed to reach agreement on key agricultural trade issues.
Weekly USDA export inspections showed steady corn demand and slower soybean and wheat movement.
Ground products account for more than half of U.S. beef consumption. Trading volume will determine whether the contracts provide dependable hedging and clearer price discovery across the beef market.
Lewis Williamson discusses the latest USDA Crop Progress report, weather, Black Sea exports, tariffs, and other factors shaping corn and soybean markets this summer.
Canadian farmers are navigating wildfire smoke and trade uncertainty as Ontario agriculture leaders call for preparedness, cooperation, and continued USMCA negotiations.
Agriculture Shows
Agriculture is the most important industry in the world, and Ag PhD Daily brings you the information you need to best manage your business only on RFD-TV and RFD+
Hosted by Scott “The Cow Guy” Shellady and RFD News Markets Specialist Tony St. James, Commodity Talk delivers expert insight into the day’s ag commodity markets just before the CME opens. Only on RFD-TV and Rural Radio SiriusXM Channel 147.
A look at the news, weather and commodities headlines that drove agriculture markets in the past week.