Strong El Niño: Good For US Cattle; Worry for Brazil, Australia

Current global forecasts indicate a strong El Niño may be developing, which is generally good news for North American cattle producers, but a mixed bag for South American and Australian producers, according to a new analysis by Rabobank Agri Economy Research.

In El Niño conditions, the southern United States and the northern part of Mexico — both crucial beef cow-calf areas — usually see cooler and wetter weather, which could spur the long-awaited U.S. herd rebuild, the report states.

Meanwhile, the Pacific Northwest, Great Plains, Canadian Prairies and British Columbia, are likely to see warmer and drier conditions.

The National Weather Service this month reported surface and subsurface temperature and water current observations in the Pacific that “reflected a strengthening El Niño,” with its models showing an 81% chance of “a very strong El Niño” during the fourth quarter of 2026, potentially as strong as any recorded since 1950. The agency voiced “very high confidence that El Niño will continue through early 2027,” setting that likelihood at 97%.

While a strong El Niño is generally beneficial to North American producers, Rabobank cautions that potential drier conditions in the northern latitudes could “stall the early stages of heifer retention and herd rebuilding that recently began among Canadian cattle producers.”

As for South America, the report says beef-producing ranches in southern Brazil, Argentina and Uruguay usually “benefit from stronger precipitation and improved grazing opportunities,” while noting that “excessive rainfall can create localized flooding and management challenges.”

However, Brazil’s major cattle producing areas in the country’s northern and central regions are closer to the equator, where El Niño often leads to drought.

“Those conditions could dampen recent optimism surrounding heifer retention and herd expansion,” per the report.

Nevertheless, the analysis also notes that 48% of Brazil’s cattle herd is located in the country’s “Center-West and Southeast regions,” which are not overly affected by El Niño.

Rabobank, a Dutch multinational banking and financial services concern, points to Q2 2026 data from the Western Brazilian state of Mato Grosso that show “a double-digit year-on-year decline in female slaughter.”

“In practical terms, producers who have not culled cows by now are already focused on improving body condition scores ahead of the breeding season, which typically takes place between September and October,” the analysts said of South American cattle producers.

A protracted drought in regions of South America is arguably “the greatest threat to the cattle sector,” which could lead to “[f]orced liquidation of grazing cattle [that] could overwhelm feedlot and processing capacity, accelerating price declines across regional cattle markets.”

In Australia, El Niño could usher in drier conditions to the eastern and central regions during the spring and summer. According to the report, Australian cattle inventory has been at more than 31 million head — “near a cyclical peak” — since 2024, and processors are near full capacity.

“Capacity limitations are the main cattle sector risk,” the analysis reads. “If dryness intensifies into drought and accelerates herd liquidation, slaughter-ready supplies could outpace processor demand, deepening price discounts across cattle classes, especially store and replacement stock.”