Tightening cattle supply amplifies China's peak-season beef rally

The Mysteel's latest data showed the national average ex-farm price of fattening bulls at Yuan 30.04/kg on September 16, 2026, flat from the previous trading day but up 15.58% year on year. The average calf price stood at Yuan 42.24/kg, up 1.93% from the previous trading day and 30.21% year on year. Profitability on the breeding side has clearly recovered, but multiple contradictions within the industrial chain have also gradually emerged.

The shallow reasons for this round of beef price increases include both the current peak season for beef consumption and the earlier epidemic disruptions that amplified this market rally.

In September, as the traditional consumption peak approaches, group catering and restaurant channels have begun restocking, driving a recovery in beef demand. In addition, earlier localized foot-and-mouth disease affected cattle weight gain, and some cattle failed to meet weight standards. Market supply of heavy, high-quality Simmental cattle has been relatively tight, and farmers take the opportunity to concentrate market releases to lock in profits, keeping quotes for high-quality cattle firm. The slaughter volumes at Mysteel's sampled slaughterhouses rose 2.56% week on week in the session ending September 11, indicating a recovery in slaughtering activity.

However, the deeper logic supporting this round of beef price increases lies in the substantive contraction of beef supply.

Over the past several years, continued losses in the industry prompted small and medium-sized farms to accelerate the culling of breeding cows. The beef cattle breeding chain is long. The cycle from conception of breeding cows to market release of commercial cattle takes nearly 28 months, and capacity rebuilding is slow. Although profits at the fattening stage have recovered, market participants have remained weak in their willingness to expand herds, with most farms and households maintaining a wait-and-see stance.

The industry shows a structural feature, where market players are willing to purchase calves for fattening to obtain returns, but willingness to actively invest in cow breeding is insufficient, and recovery of foundational capacity falls short of market expectations.

In addition, the price increase for cull cows has been particularly prominent, and the price gap with fattening cows has continued to narrow. Young cull cows have become the main trading force in the spot market, and some younger cows have also flowed directly into slaughter, continuously depleting reserve breeding cattle supply and further amplifying the medium to long-term supply gap.

Lastly, with the implementation of tariff policy beyond the beef import quotas, supply of low-priced imported frozen products has contracted, and end-market consumer demand has gradually shifted toward domestic beef. Slaughterhouses' capacity to purchase domestic live cattle has increased, weakening the impact of low-priced imported frozen products on domestic spot prices and providing support for upward movement in domestic live cattle prices.

Overall, in the short term, beef cattle and beef prices may remain stable with a slight upward bias. However, whether the market can rise further depends on indicators such as end-market demand potential, market release weights, farmers' willingness to sell, and slaughterhouses' operating rates.