Cattle markets struggled through summer with a major market correction, numerous headlines and external factors that largely masked underlying market conditions. But with cooler weather ahead, producers can expect a recovery.
Coming into fall, markets were pummeled by a barrage of political and trade actions, despite a midyear Cattle report that showed a still smaller beef cow herd and calf crop in 2026.
The August Cattle on Feed report confirmed that average feedlot placements and marketings are at the lowest level in the entire COF data series back to 1996. At the same time, Choice boxed beef prices bounced back from seasonal midsummer lows with strong wholesale beef prices for the end of the summer grilling season.
Both supply and demand fundamentals continue very strong.
Summer took a toll
Widespread extreme heat contributed to these market challenges as reemerging drought and deteriorating forage conditions weighed on cattle markets:
Drought and pasture conditions. Nationwide, drought conditions worsened. U.S. range and pasture conditions faded through July and August, with 50% of the country in poor to very poor condition by the third week of August.
Hay production declines. USDA released estimates of 2026 hay production in the August Crop Production report, showing total hay production down 7.9% year over year — including a decrease of 5% in alfalfa hay production and a 9.9% decrease year over year in other hay production. May 1 hay stocks were down 3.3% from last year, leading to the estimated total 2026 hay supply being down 7.2% year over year.
Tighter cattle supplies ahead
The July Cattle report provided an estimate of feeder cattle supplies available in the country. Inventories included steers (more than 500 pounds), other heifers (less than 500 pounds) and calves (less than 500 pounds), with the cattle on feed inventory subtracted. This estimate was 33.6 million head, down 0.6% year over year and the smallest ever July estimate.
A smaller 2026 calf crop implies that feeder supplies will continue to decrease into 2027 at least.
The July inventory of beef replacement heifers was up 2.7% year over year, an indication of limited heifer retention, although not enough to signal herd growth. Additional heifer retention will further squeeze feeder supplies. Fewer feeder cattle means reduced feedlot production and lower cattle slaughter beyond 2026.
Mexican cattle slowly returning
The Mexican border reopened Aug. 24 for cattle through the Agua Prieta, Sonora-Douglas, Arizona port. The USDA announced that barring any complications, one of the New Mexico ports will open 30 days later, followed by the other New Mexico port in another 30 days.
The process of reopening the border removes one source of uncertainty, but significant numbers of Mexican cattle entering the U.S. is still several months away.
Noise in the beef markets
Recent announcements of expanded beef imports, the Mexican border reopening and packing infrastructure reductions — along with broader geopolitical tensions — add much uncertainty and volatility to cattle and beef markets.
Market recovery has been repeatedly delayed, but the supply and demand fundamentals suggest that the general trajectory of the cattle industry will continue beyond 2026.
Despite those strong fundamentals, the path forward is likely to continue to be rough and rocky.