US cattle market musings right from the source

Last week I spent time travelling throughout the US engaging with fellow StoneX colleagues and their clients – discussing the US cattle market. 

For Australian readers, understanding the key themes and areas of importance for a major trading partner of ours such as the US directly from the source, ensures you remain up to date with key, accurate insights and information.

This column discusses those themes that remained extremely prominent across my conversations, both StoneX clients and our US meats and livestock division raising these points.

Short supply of cattle at a new low in 2026

Through both internal discussions with fellow StoneX team members and also in client meetings, the theme of how short cattle supply is, was to me the defining theme or discussion point I picked up on.

“The market in the US is seeing new, 10-year lows in weekly slaughter volumes as proof and the surprise and conversation this has generated is substantial.”

The belief within the marketplace is that this situation is only going to get worse in the short to medium term – the reduction in availability of feeder cattle entering the US from Mexico due to New World Screwworm is further exacerbating the issue.

Notably, the reduction in both grainfed and non-grainfed slaughter numbers are aligning with continued sustained stability in export orders for Australian beef in the US market – something we’ve come to see in the stability of monthly exports in metric tons to the US over the past 12-14 months.

Despite the shortness of supply of cattle, US beef production continues to remain very strong. Driven by strong cost of gain equations for US feedlotters encouraging them to add more weight to cattle before finishing their programs.

On current numbers, it cost around US$1 to add 1 pound of weight, and at the same time, the feedlotter is receiving roughly US$2.30/lb for that animal. The ratio at 2.3:1 means the economics are in favour of the feedlotter to add more weight and that’s upholding beef production despite the downturn in output of physical cattle numbers processed.

The divergence between cattle supply and beef production, going in opposite directions is a very real conversation in the US.

The US herd rebuild

At a data level, conversations last week told me that when the United States Department of Agriculture released the January 1, 2026, cattle inventory figures, the market was a little deflated with what the numbers showed.

The data pointed to stability or a potential bottoming out in the herd size in 2025, but there were no signs of a rebuild beginning to occur in the figures. This could be determined by another slight fall in total numbers of cows and also no signs of an increased calf crop.

While seasonal conditions throughout major cow/calf regions of the US have continued to improve, the feedback I received was that whilst the US cattle market continues to remain so strong, there’s little incentive for a herd rebuild to actually take place.

If the market were to materially correct in the US, that would provide incentivisation for retention of heifers and older cows to begin rebuilding.

“The high prices are actually forcing continued declines in numbers, not encouraging people to hold back and retain”.

Processor losses continue to suggest further consolidation in 2026

US Beef Processors are losing large sums of money per animal based on current market estimates, anywhere from US$150-$300 per head.

This issue and the impacts of it was the second most discussed topic I found when listening to people during my time there.

There’s growing consensus that further consolidation of US beef packing capacity can be expected in 2026 as a direct result of the unprofitable nature of the market.

“People are of the view that US beef processors are going to significantly slow down kill chains or shut the processing plant completely due to the economics of it”

The economic challenges facing the processing sector, alongside its own inflated capacity due to large kill numbers over the past 3-4 years due to herd liquidation has occurred at a critical period of significant constrained availability on cattle supply.

The Bottom Line

• A lack of US cattle supply, processor profitability and no genuine signs of a US herd rebuild were the major talking points of my travels to USA last week.
• Further reduction in US processing capacity is expected by the market due to the significant economic losses being experienced at present.
• Cost of gain for feedlotters is continuing to encourage more pounds added before feeders are being turned off – meaning beef production remains stronger than expected.

Ripley Atkinson's experience in the red meat industry and current role at StoneX developing price risk management tools for Australia’s sheep and cattle sectors ensures he delivers unique, whole of supply chain insights and analysis across key factors such as prices, supply, production and the drivers of the sheep and cattle cycles.

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