The stock market has been roaring since OpenAI introduced ChatGPT in November 2022. AI-mania has powered the S&P 500 to gains of more than 20% annually over the past three years. But something decidedly less hi-tech has performed even better: beef. The CME Cattle Feeder Index, which tracks the price of steers sold in the U.S., has gained 21.5% annually over the same period. The outperformance is even bigger over 5 years. Business is good for cattle ranchers and livestock speculators!
Such gains may not be a surprise to most Americans, who consume a lot of beef (83 lbs per capita per annum). And many don't like it! Newspapers and television have screamed about runaway beefs prices. According to the St. Louis Fed, ground beef prices touched $6.63/lb in August 2025, up from an average of $4.23/lb pre-pandemic. Yes, while the latest 'bull' market in stocks started in late 2022, the literal bull market took off after the pandemic. Per the WSJ, cattlemen are now making a record profit of "more than $700 per animal, up from $2 five years ago."
And it comes down to basic supply and demand. Ranchers across U.S. had started selling off their herd several years ago as chronic drought, costs, and debt pressured the business. Losses peaked during Covid-19 when many meat processors and restaurants shutdown, backing up livestock inventory and driving down cattle prices. While beef demand is strong, many ranchers have held back from increasing the size of their herds. As a result, U.S. cattle inventory totaled ~87 million as of January 1, 2025, the lowest since 1951. Back then, the U.S. population was 153 million; today it's almost 344 million. You do the math.
As shown above (and below), the U.S. cattle industry began herd liquidation in 2019 when inventory reached 95 million head. According to Beef Magazine, liquidating inventories is one phase of the cattle cycle that typically extends for 10-12 years with "expanding and contracting cattle numbers driven by changes in producer profitability and worsened by drought." While strong prices suggest "there are incentives (for ranchers) to begin rebuilding (their stock)...signals for expansion remain muted at this point." The WSJ article noted many ranchers are looking to pay off longstanding debt and upgrade equipment with their profits rather than growing their herd; they are also wary of inflation that makes livestock feed more expensive.
Source: WSJ and Agriculture Department. *Estimates are for January of each year.
Industry analysts are unsure how long this 'bull' market will last, but it appears the livestock trade still has some ways to go. Tyson Foods and JBS, two of the world's largest meat companies, estimate cattle supplies could edge up in 2027 or 2028. Beef Magazine feels "structural constraints, input costs, and financial considerations will likely delay a rapid recovery in beef cow numbers." Moreover, they estimate that the herd rebuild this cycle "will be slower than the last rebuild that began in 2014...(which) is likely to mean relatively tight supplies and support for cattle prices for the next few years." So, the trade for 2026 is to still be bullish on beef!
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