By Jamie Martin
Cattle feeders are entering a period of tighter margins as rising input costs and expensive feeder cattle offset strong fed cattle prices. According to a market outlook from Purdue University, profitability across the cattle finishing sector is expected to remain under pressure through 2026 and into 2027.
Feed costs continue to play a major role in profitability. Feeding cost of gain has stayed above $100 per hundredweight for several years and is expected to remain between $100 and $105 through the rest of 2026. Corn prices continue to be the most important driver of these costs.
The ratio between feeder cattle prices and fed cattle prices is another key measure of influencing returns. Historically, lower ratios have supported profitability, while higher ratios have often led to losses. Between November 2025 and March 2026, this ratio remained unusually high, creating difficult conditions for cattle finishers.
Although losses were recorded during several months early in 2026, conditions improved in the spring. Positive net returns returned in April and May as market relationships became more favorable.
The strongest profitability of the past decade occurred during much of 2025. Net returns frequently exceeded $300 per head as strong cattle prices supported feedlot operations. However, higher feeder cattle costs have since reduced profit opportunities.
Breakeven prices have risen dramatically over the last few years. After averaging approximately $174 per hundredweight in 2023 and $192 in 2024, breakeven prices climbed to around $205 in 2025. By early 2026, they approached $250 per hundredweight.
Market projections indicate breakeven prices could remain above $250 per hundredweight through late 2026 and into the first half of 2027. Such levels are well above historical norms and represent a significant challenge for the industry.
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