The most likely effect of cedar trees on peach trees is root competition for the same soil resources, such as moisture and nutrients. Cedar trees are highly drought tolerant and develop rather shallow, fibrous roots that sprawl out from the trunk. With more roots, cedar trees are better able to absorb more nutrients and water compared to a nearby peach tree. Peach trees grow best in a well-drained but moist soil, so such conducive growing conditions would benefit the growth of cedar tree roots in the same area.
When it comes to fruit tree cultivation, the main concern with cedar trees is the presence of a fungus that causes cedar-apple rust. The fungus grows with two life cycles, going back and forth between cedar trees and juniper shrubs and apple and crabapple trees. Cedar-apple rust does not affect peach trees. Since cedar trees are conifers and peaches are flowering trees, they are not closely related and the two types typically do not share the same problems. However, soggy soils can lead to root rot in both.
If a peach tree is planted close to a large, established cedar tree, additional watering may be needed to ensure the peach gets enough soil moisture. Dry conditions stunt peach tree growth and limit root establishment, which is seen as slow growth or stress with wilted or yellowed leaves. A large cedar tree may also cast shade onto the peach, limiting its vitality and ability to bloom as heavily.
Other reasons for a peach tree's decline include soil nematodes. These microscopic creatures attack peach tree roots, limiting the ability of the tree to absorb water and nutrients. The types of nematodes vary by region, especially in the soil type and soil temperature during the growing season. Peach orchards, or planting peach trees where peach trees previously grew, can cause the trees to grow with decreased vigor. This is referred to as peach tree short-life syndrome, or simply "peach tree decline."