The cattle cycle tracks the total inventory of both cattle and calves in the United States, averaging 8 – 12 years from peak to trough with 12 peaks and 11 troughs documented since 1890. The cycle is indicative of producer and packer supply and demand, which are influenced by immediate and forecasted cattle prices, input costs, weather, breeding and genetics.

Live Cattle and Feeder Cattle futures prices have been mounting since mid 2020, with front-month Feeder Cattle and Live Cattle futures reaching all-time highs of over $380/cwt on October 14, 2025 and over $258/cwt on April 30, 2026, respectively. According to the USDA, as of January 1, 2026, a total headcount of 27.6 million beef cows in the United States was down 1% year over year: the lowest year-start inventory since before 1970. Overall inventory is at the lowest point since the 1950s.

Meanwhile, federally inspected heifer slaughter accounted for 31.7% of total cattle slaughtered during 2025, down from 32% in 2024. The percentage of heifers kept as replacements for breeding purposes is 17.07% as of January 2026 versus 16.74% as of January 2025, indicating a slight uptick.

Despite this modest decrease in heifer slaughter and slight uptick in percentage of heifers kept as replacements, record-high prices and record-low inventories indicate the cattle cycle still sits in the contraction phase as high costs and drought conditions persist. The trade closely watches heifer retention to gain insight into the current cycle and when the next is expected to begin. When heifer retention levels start to increase significantly, one can surmise that the inflection point is near and herd expansion is soon to follow.

Beef-cattle life in the United States generally begins on a cow-calf operation. According to the latest USDA Census of Agriculture, cow-calf operations in the United States average 44 head nationally, with 90% of the operations being family owned, and grazing land covering 27% of the United States by area.

Cow-calf operations, particularly in the Western United States, are frequently situated on land not suitable for crop production. Cattle gestation takes approximately 280 days, and cows can give birth once per year. Breeding cows and their calves, on the whole, are maintained year round in pastures and/or rangeland with little to no grain input. Once calves are weaned, unless the animals are chosen to stay in the operation to breed, they will enter the feeding system through various paths such as a stocker or backgrounding operation and will eventually be sold as “feeder cattle.”

The CME Group Feeder Cattle futures contract represents this stage in the cattle lifecycle. One Feeder Cattle futures contract represents 50,000 pounds of steers (each weighing between 700 and 899 pounds) sold at auction in the 12-state region of Colorado, Iowa, Kansas, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas and Wyoming. Cattle must be of Medium and Large Frame #1 and Medium and Large Frame #1 – 2. Cattle identified as predominantly dairy, exotic or Brahma breeding are excluded. A daily index is calculated from USDA-reported auctions of such animals, on which the futures contract is financially settled at expiration.

Once at the feedlot, animals are fed with a target weight gain of 2.5 lbs – 4 lbs per day. Rate of gain will differ by operation and animal due to various factors, but generally 6lbs of dry matter can translate to 1lb of gain. Feedlots provide a diet that can include corn, soybean meal, hay, grass and wheat, as well as additives to optimize growth. Cattle will typically remain at the feedlot for three to six months.

Once they have reached slaughter weight, the cattle are then sold to meat packers. Cattle price risk at this point in the supply chain can be managed using CME Group Live Cattle futures. One Live Cattle futures contract represents 40,000 pounds of live steers or heifers, each between 1,050 and 1,600 pounds depending on sex. for contract months up to and including the August 2026 contract month. For contract months commencing with the October 2026 contract month and beyond, one Live Cattle futures contract represents 40,000 pounds of live steers or heifers, each between 1,050 and 1,650 pounds depending on sex. The Live Cattle futures contract is a physically delivered contract: Delivery units shall have an estimated average hot yield¹ of 63%. Par delivery for Live Cattle futures is 70% Choice, 30% Select, Yield Grade 3. The contract provides the option for carcass delivery at a slaughter plant or live graded delivery at an approved stockyard.

While the cattle cycle has existed for more than 130 years, the life cycles of modern cattle differ greatly from those described by early cycles. The average age at slaughter for beef cattle in 1977,² for example, was 609 days: 30% longer than the 468-day life of average beef cattle in 2007. Even at the significantly shorter life, the average carcass in 2007 yielded 28% more beef per animal (351 kg in 2007 compared to 274 kg in 1977). The same quantity of beef was produced in 2007 as in 1977, with only 69.9% of animals and 81.4% of feedstuffs.

Low herd numbers have sustained high prices, signaling that the nation remains in the contraction phase of the cattle cycle. In response, heifer retention and eventual herd rebuilding are expected in the coming years. The duration of the remainder of the contraction phase will depend greatly on weather and pasture conditions as well as producer profitability. Throughout the present cattle cycle and beyond, CME Group will continue to provide global benchmarks for gaining industry exposure and managing livestock risk. Learn more at www.cmegroup.com/livestock.

1. Percent of the slaughter weight comprised of carcass before cooling
2. https://academic.oup.com/jas/article/89/12/4249/4772093