The national cattle herd has shrunk to its smallest size since the early 1960s, driven by years of drought-forced sell-offs and the high cost of holding animals. Texas, which runs roughly 4 million beef cows — far more than any other state — felt that contraction first and hardest during the brutal 2022–2023 drought years.

Scarcity has done what scarcity does. Lightweight steers that brought around $326 per hundredweight in Texas auctions in early 2025 were fetching roughly $450 a year later. Older cull cows and bulls — normally an afterthought — are selling at record salvage values. CattleFax projects fed steers to average around $224 per hundredweight in 2026, holding near historic highs, with feeder cattle trending even higher.

For the cow-calf operators who survived the drought years, margins look strong: feed costs have eased, demand has held, and every calf on the ground is worth more than it has ever been.

The catch: ranchers aren't rebuilding

In a normal cycle, prices like these would trigger a rush to expand herds. That's not happening — at least not quickly. Bred heifers are selling for $4,000 to $5,000 a head, which creates a powerful incentive to cash out today rather than hold animals for future production. Many ranchers, especially older ones and smaller operations battered by years of rising input costs, are taking the money.

Texas A&M AgriLife economists describe the current rebuild as far more cautious than past post-drought recoveries. Heifer retention is inching up, but slowly. The practical result: tight supplies — and high beef prices at the grocery store — are likely to persist into 2027 and beyond. Consumers are already paying it. Choice beef crossed $10 a pound this spring, up from about $8.75 a year earlier, and retail beef prices overall have climbed more than 50 percent since 2020.

The threat: screwworm is back

On June 3, the USDA confirmed New World screwworm in a three-week-old calf in Zavala County — the first detection in U.S. livestock since the parasite was eradicated decades ago. Within a week, cases grew to a handful across South Texas, plus a dog in New Mexico. The screwworm fly lays eggs in open wounds; its larvae feed on living tissue and can kill untreated animals.

The state response moved fast. Animal health officials established a quarantine and movement-control zone covering parts of Zavala and Uvalde counties, Gov. Greg Abbott issued disaster declarations and deployed state resources, and the USDA is accelerating sterile-fly releases — the same technique that wiped out the pest in the 1960s.

The stakes are enormous. The Dallas Fed warns that a widespread Texas outbreak could shrink the herd further, cost the industry billions, and push beef prices — already at records — higher still. The border has been largely closed to Mexican feeder cattle as the outbreak spread north through Mexico, tightening supplies even more and prompting the U.S. to expand beef import quotas from Argentina to ease pressure.

What to watch in 2026 and beyond

Containment, or not. If sterile-fly releases and quarantines hold screwworm to a localized incursion, this becomes a scare. If it establishes in South Texas wildlife, it becomes a years-long fight.

Drought. Much of the Southern Plains enters summer with real moisture risk. Another dry year would stall the rebuild entirely.

The 2027 turn. Analysts expect larger cattle supplies in 2027, meaning today's record prices may be near the cycle's peak. Ranchers holding heifers now are betting the highs last; those selling are betting they don't.

The bottom line for Texans: beef stays expensive, ranchland stays valuable, and the next twelve months — between a parasite at the border and a drought map turning brown — may decide whether the Texas herd grows again or shrinks into uncharted territory.

Sources: USDA APHIS, Texas Animal Health Commission, Office of the Governor, Dallas Fed, Texas A&M AgriLife Extension, CattleFax, Texas Farm Bureau.