Cattle break-even prices enter uncharted territory

WEST LAFAYETTE, Ind. — Current projections suggest many cattle finishers could see little to no profit — or even losses — through the rest of 2026 and into 2027.

Fed cattle prices are near record highs. So, why aren’t cattle finishers necessarily making record profits?

“Cattle finishing is a margin business where profitability depends on feeder cattle prices relative to fed cattle prices as well as feed costs,” said Michael Langemeier, agricultural economics professor and director of the Center for Commercial Agriculture at Purdue University.

“That means that relatively high fed cattle prices, like we’re experiencing in 2026, doesn’t necessarily translate into strong net returns. It depends on what you pay for those cattle that you put into the feedlot in addition to the fed cattle prices.”

Langemeier said there are three important pieces of this puzzle: feeding cost of gain, the feeder-to-fed cattle price ratio and break-even prices.

“Feeding cost of gain has remained above $100 per hundredweight since June of 2021. In fact, during the first eight months of 2023, it exceeded $140 per hundredweight because we had relatively high corn prices,” he said.

“So far in 2026, feeding cost of gain has ranged from $101 to $104 per hundredweight. And based on current corn and alfalfa projections, it’s expected to remain in that range for the rest of the year.”

Feeding cost of gain is sensitive to changes in feed conversion, corn prices and alfalfa prices.

“Our analysis indicates that each one-tenth increase per pound in feed conversion raises feeding cost of gain by just over $2 per hundredweight — a large impact,” Langemeier said.

“A 10-cent increase in corn prices, that’s a small change, raises feeding cost of gain by approximately $1 per hundredweight. And a $5 increase in alfalfa prices adds about 50 cents per hundredweight to feeding cost of gain.”

Changes in corn price, he noted, explain roughly two-thirds of the historical variation in feeding cost of gain.

Historical Data

An even more important factor in today’s environment is the feeder-to-fed cattle price ratio.

“What you pay for the feeder cattle is just as important as what you get for the fed cattle. Profitability depends on both. And it depends specifically on the relationship between feeder cattle prices and fed cattle prices,” Langemeier said.

Since 2016, the feeder-to-fed cattle price ratio has averaged about 1.24.

“When this ratio has been well above average, cattle finishers have generally experienced positive returns. During these months, average profits exceeded $100 per head,” Langemeier said.

“In contrast, when the ratio moved well above average — you’re paying quite a bit for feeders compared to fed cattle, in other words — average losses exceeded $200 per head. That’s exactly what we experienced from late 2025 into early 2026.”

The feeder-to-fed cattle price ratio remained unusually high from November through March, resulting in finishing losses. The ratio declined in April and May, and net returns turned positive again.

“Looking ahead, current projections suggest the feeder-to-fed cattle price ratio will remain above its long-run average through the rest of 2026 and into 2027,” Langemeier said. “That means that feeder cattle costs are expected to continue putting pressure on finishing margins.”

Cost Recovery

Break-even prices are related to feeding cost of gain and feeder prices specifically and have changed dramatically over the past several years.

From 2016 through much of 2022, break-even prices generally ranged from $100 to $150 per hundredweight.

Since then, they have increased steadily. They averaged $174 in 2023, $192 in 2024 and about $205 in 2025.

During the first quarter of 2026, break-even prices reached nearly $250 per hundredweight.

Current projections indicate break-even prices will remain above $250 through the end of this year and into the first half of 2027.

Those projections incorporate expected feeder cattle prices as well as projected feeding cost of gain, Langemeier said.

“When we compare these break-even prices with USDA’s fed cattle price projections, expected net returns for the remainder of 2026 and the first half of 2027 range from roughly a $100 loss per head to break-even,” he said.

“As always, these projections are subject to considerable uncertainty, particularly with fed cattle prices. And feeder cattle prices, too, is gonna make a difference. And these prices can change rapidly.”

The key takeaway is that relatively high fed cattle prices do not necessarily translate into strong cattle finishing returns.

“Average cattle finishing net returns were strong in 2025, but that’s because we had stronger-than-anticipated fed cattle prices,” Langemeier said.

“Current projections account for these relatively high feeder prices we have today and really result in break-even prices that are extremely high compared to what they’ve been historically.

“As a result, cattle finishers could face much tighter margins during the second half of 2026 than they experienced in 2025.”