Economic Forces Challenge Beef Market Growth

Economic Costs Drought and Imports Influence Cattle Market Stability

The economics of the U.S. beef and cattle market show a complex mix of growth and restraint. While ranchers are earning dependable returns for the first time in years, record-high production costs and weather challenges continue to limit herd rebuilding.

In early 2025, U.S. cattle numbers fell to 86.7 million head, marking the lowest level since 1951. Years of drought have damaged pastures, driving up feed and transportation costs.

Many producers sent female cattle to market instead of keeping them for breeding, further shrinking herd sizes. Even if herd expansion starts now, it could take until 2028 before the market feels the impact of new calves.

Beef demand remains strong, with USDA projecting consumption at 28.6 billion pounds in 2025. This demand supports higher prices across the beef supply chain, but market intervention measures—like import expansions—threaten to reduce returns for cattle producers.

The recent rise in beef imports from Argentina and Brazil, alongside a tariff quota increase for Argentine beef, has already caused future feeder cattle prices to drop by 7%. Meanwhile, the U.S.-Mexico border remains closed to livestock due to the New World screwworm threat, creating more supply uncertainty.

While the current market benefits from strong demand and steady returns, risks remain. Any fall in beef prices could erase profits and discourage herd growth, deepening reliance on imported beef.

The sector’s long-term success depends on balanced policies that support producers while keeping beef affordable for consumers.