Cattle outlook: Peel predicts more high prices, tight supplies for 2026
Derrell Peel, Oklahoma cooperative Extension livestock marketing specialist, spoke at the Central Oklahoma Beef Conference Feb. 13, in Stillwater, Oklahoma. He updated producers on the current cattle market and provided predictions for the future. The headlines surrounding cattle prices have conveyed the same message for the last few years: Unprecedented high prices across the board with no concrete signs of a herd rebuild anytime soon.
“We started this run in late 2022, and it’s been pretty continuous,” Peel said of cattle prices. “We’ve had a few little setbacks along the way, and that will happen. The higher we get, the more likely we are to see that kind of volatility.”
Peel referenced President Donald Trump’s statements in October 2025 about purchasing beef from Argentina to lower meat prices and the controversial social media post he wrote after he faced scrutiny from the beef industry. His statements resulted in a dip in cattle prices.
“We had had a strong run up through the year and the market was kind of looking for a chance to do some correction,” Peel explained. “In October, that was about the high of the year up to that point, but by mid-November, we had pulled back significantly. But then by January, we have recovered virtually all of that at this point in time. It speaks to how resilient this market is right now. It’s bulletproof, but it’s not bomb proof. However, what we’ve seen here is that even the bombs don’t last very long in general.”
Cattle inventory
Cattle numbers are at the root of the astronomical prices the industry has enjoyed in recent years.
Peel said the United States Department of Agriculture’s Jan. 1 annual cattle inventory report showed a total of 86.2 million head of cattle in the country, the smallest herd since 1961. This equated to a decrease of 0.4% overall. Peel said he suspected this year would be the low in this cycle, but had thought the same thing about 2025, and he was proven wrong.
Beef cow numbers were down 1%, according to USDA, a statistic that surprised Peel.
“It was not necessarily a big surprise to see a decrease, but that was down a little bit more than I would have expected,” he said.
Looking at individual state cow inventory, Peel said only three of the top beef states showed a slight increase in beef cow numbers—Oklahoma, North Dakota and Florida. Texas, Missouri, Kansas, Nebraska, Wyoming, and South Dakota; all showed slight decreases year-over-year in terms of beef cows.
The overall beef cow herd has decreased by more than 4 million head since its last peak in 2019, but beef replacement heifers were up 0.9% in January 2026. However, the calf crop fell by 1.6%, making it the smallest calf crop since 1941. Cattle on feed numbers showed a 3% decrease, but feeder cattle supplies showed an upturn of 0.9%. Peel said the cattle on feed numbers are somewhat misleading due to the way it is calculated. He believes feeder numbers are lower than reported.
Peel said dairy cows are at the highest level they have been since the 1990s with a 2% increase since last year. He said the dairy herd always stays consistent and only varies by 200,000 to 300,000 head over time. In fact, Peel said more than one out of every four cows in the U.S. is a dairy cow right now.
Although some beef inventories saw slight increases, Peel said nothing will change as far as a rebuild this year.
“We will not grow the beef cow herd in 2026, and we won’t grow it much, if any, in 2027,” he explained. “Maybe this slight increase means that at least a few folks are thinking about saving a few heifers. If we do more of that this year, we could be on a path eventually to seeing some herd growth, but it’s going to take some time.”
Beef production and demand
Peel said beef production was down 3.7% last year and he expects to see inevitable drops in production in 2026 and 2027. Supplies are tight, but what has that done to demand? The short answer: Nothing. Consumers still want to buy beef even with the high cost at the supermarket.
“Beef demand has been remarkable,” Peel said. “We continue to watch it and worry that we’re too high. But we’re not too high because if we were, people would eat more pork and chicken, and they’re not. Contrary to what you hear, we don’t have a problem with meat prices being too high. We don’t have a beef demand problem. Beef prices are high because consumers are willing to pay for it. We have a tight supply, and we’re probably going to see these prices continue to push up as we ration an even tighter supply going forward.”
In response to tighter supplies, Peel said consumers might eat less beef, but it will not be due to demand.
“If per capita consumption goes down, it’s because we’re not supplying them enough beef,” he explained. “Per capita consumption is a measure of supply, not demand.”
Peel revisited President Trump’s plan—for which he signed an executive order this month—to increase Argentina’s quota of imported beef to lower beef prices for consumers. Even though this has created controversy, Peel said it shouldn’t create waves when additional beef is imported.
“It’s all politics and has nothing to do with the market,” Peel said. “Even if they do fill that expanded quota, it will probably just displace beef that we’re getting from Brazil or Australia. It won’t change production or the supplies in the U.S. It won’t even change ground beef prices. And it sure as heck won’t have any impact on any other part of the animal, like steak prices.”
Another topic that could cause market volatility is the presence of New World screwworm in the U.S. or if the Mexican border, which has been closed since November 2024, is reopened at some point.
“When the border reopens, futures markets will react negatively for probably two or three days, and then they’ll figure out it’s not that big a deal,” Peel explained.
Peel thought markets would have a similar adverse reaction to NWS flies being found in the U.S. However, the management would become extremely costly for the industry and our government if the flies make it here.
Expansion and outlook
So, what will it take to trigger herd expansion? The first step is to lower cow culling numbers, which has already been happening.
“Beef cow slaughter has been down about 40% in the last three years,” Peel said. “We’ve dropped cow culling to a low enough level to allow us to stabilize the herd. That’s why I thought last year might have actually been a low.”
However, to grow the herd, producers must save heifers and develop them to increase cow numbers over time.
“If we start saving heifers in 2026, we can breed them in 2027 and have their calves in 2028,” Peel said. “By the time those calves are on the ground and weaned and through the feedlot, we’re pretty close to the end of the decade, and there isn’t anything anybody can change that. We haven’t figured out how to build them out of spare parts in the basement yet. There are only so many heifers, and the biology is what it is.”
Low cattle numbers continue to drive calf prices, which sends a clear signal to the producer: Produce more calves. The market is incentivizing rebuilding, but there is still trepidation on the part of cattle raisers. Peel said part of that is due to drought concerns.
“We’re still recovering from drought over the last several years, which is how we got here,” Peel said. “If you look at the map, it’s a little bit ominous looking. We’ve got some challenges going forward, just to get through the winter, let alone concerns about what the next growing season might look like.”
Peel said this cattle cycle is extremely unique and will be much slower than past rebuilds. He said supplies will have to get even tighter for change to happen in the market, and a rebuild will truly begin. Risk management for cattle producers will be valuable in the event of short-term volatility with markets.
“The expansion from 2014 to 2019 was built off one or two years of good returns,” Peel said. “We’ve already had four, and we’re not really turning the corner very fast here. We’re at record high prices, and I expect higher average prices for all cattle in 2026 and 2027. A little bit of flexibility goes a long way in this market, because it is very resilient. You need some risk management tools in place for those marketing windows when you’re going to have to sell, whether it’s Livestock Risk Protection or futures and options or some other mechanism to try to protect yourself in the event that something unfortunate happens briefly.”
Lacey Vilhauer can be reached at 620-227-1871 or [email protected].
