USDA’s Cattle Inventory Report and Cattle on Feed Report delivered the signal many in the industry have been waiting for — total cattle numbers have finally nudged higher, suggesting the industry has hit the cyclical low.
As CattleFax Market Research Director Patrick Linnell told Michelle Rook on AgriTalk Friday, the 0.2% rise in all cattle and calves — paired with only a “pretty minor” increase in heifer replacements and beef cows still edging lower — points to a slow, drawn‑out rebuild, not a rapid herd expansion, as producers navigate drought, high costs and other long‑running structural challenges.
Key numbers from the inventory report:
- All cattle and calves: 94.2 million head — up 0.2%
- Cows and heifers that have calved: 38.1 million head — unchanged
- Beef cows: 28.5 million head — down 1%
- Milk cows: 9.65 million head — up 2%
- Beef replacement heifers: 3.8 million head — up 3%
- Cattle and calves on feed for the slaughter market in the U.S. for all feedlots: 13.2 million head — up 2%
- Calf crop: 32.5 million head — down 2%
Linnell says those figures largely confirm what the industry has been expecting. “Finally, a print higher in terms of total cattle numbers, signifying that it looks like the cyclical low is finally behind us.”
Derrell Peel, Oklahoma State University extension livestock marketing specialist, adds, “There are indications that we’re trying to stabilize this thing, but the beef cow herd comes in a little smaller compared to last year. The replacement heifers were up a little bit, so all of that suggests that we’re just very, very slowly trying to stabilize this thing, but no real progress. You can’t really officially start the clock on herd rebuilding here.”
Peel predicts the industry is near the bottom of the cattle cycle, but not past it in a decisive way.
“We have. Yes. I mean, I do think we’re trying to stabilize,” Peel says. He adds that by the next Jan. 1 snapshot, the herd could be “very close to unchanged, if not up fractionally,” which “might be enough that we can put an official bottom in this cattle cycle” — but he stresses “it’s not 100% sure yet.”
Small Gains, Big Caution
Even with that slight bump in total cattle and calves, Linnell stresses the pattern points to a gradual, cautious approach to rebuilding.
One surprise in the report is that beef cows are still slightly lower, down about 200,000 head. That’s notable given how aggressively producers have already culled.
“You look at beef cows that were still pointed slightly lower, down 200,000 head,” Linnell summarizes. “I think that’s a little bit surprising on one hand when you consider how tight cow slaughter’s been running, record low culling rates through the first half of the year.”
Despite record-low culling, the beef cow herd hasn’t yet moved decisively higher. That underlines just how deep the contraction was — and how slow the rebuild will be.
Heifer Retention: First Sign, But Only a “Pretty Minor” Move
For most cow‑calf producers, the first sign of expansion is heifer retention. On that front, Linnell sees progress, but not a stampede.
“It was a pretty minor increase, up just 100,000 head,” he says, noting that’s about the smallest change USDA’s rounding will even show.
Still, he believes the data are consistent with what CattleFax has been seeing in the country: “Those indicators were pretty consistent with a slow small tick higher in replacement numbers.”
In other words, more heifers are being held back, but just barely. The message to producers: The industry is turning the corner, not racing around it.
Why Expansion Stays Slow
When asked what’s holding the herd back from a stronger expansion, Linnell didn’t point to a single factor. Instead, he laid out a stack of challenges that many producers will recognize from their own operations:
“Drought has obviously been a big challenge here, but it’s that same story that we’ve been facing — that’s an aging producer demographic, labor challenges, high costs, urban sprawl and alternative land uses.”
He emphasizes these pressures don’t hit every ranch the same way, but collectively they drag on the pace of expansion. Even as conditions improve enough to allow some rebuilding, those long‑term headwinds aren’t going away.
Calf Prices “Shot to the Moon”
The other major brake on expansion is coming straight from the market. With calf and feeder prices at extremely strong levels, many producers are understandably tempted to sell heifers rather than keep them.
Linnell put it bluntly: “At the same time, the way these calf prices have shot to the moon so quickly, you understand why some producers have been opting to sell those heifers rather than retain them, even if they really did want to rebuild.”
That trade‑off will sound familiar on a lot of farms and ranches as producers consider capitalizing on the strong cash prices today or give up that revenue to grow the cow herd for tomorrow. In this environment, plenty of producers are choosing to take the cash.
Cattle on Feed: Steady Numbers, Heavier Cattle
On the cattle on feed side, the story is similarly steady.
Key numbers from the cattle-on-feed report:
- Cattle on feed: 11.4 million — up 2%
- Cattle placements: 1.40 million head — down 3%
- Marketings: 1.66 million head — down 3%. Marketings were the lowest for June since the series began in 1996.
Linnell describes the report as “pretty unsurprising” and “fairly benign” for the markets: “Unsurprising, and really should be fairly benign in terms of the market impact there.”
Peel agrees, saying, “No surprises really.”
Placements are down in line with tight feeder supplies, and the on‑feed total is supported by cattle staying on feed longer. Those extra days on feed are showing up clearly in carcass weights.
“If you look at weights starting to turn back higher again and remaining a record for this time of year, you can see the slow turnover rate there,” Linnell summarizes.
The share of heifers on feed nudged slightly higher but remains around normal levels.
“The heifers on feed as a percentage of the feedlot total actually went up by one‑tenth of 1% from the April numbers, so it’s holding in there right at the long‑term average,” Peel says. That’s “consistent with the idea that we’re probably not getting very aggressive about heifer retention.”
For producers, the combination of tight feeder supplies, fewer placements and heavier cattle supports a firm price structure, even if it complicates packer margins and chain speed.
Market Outlook: Oversold Futures, Watching Cash
From a price standpoint, Linnell doesn’t see anything in these reports that should be overly negative for the market. In fact, he suggests that futures had become technically oversold.
“It looks like certainly from a technical standpoint, the market was oversold, and with the discount in the futures compared to the cash, it does favor that maybe we can catch some stability here for the time being,” he says.
The key, he adds, will be getting cash cattle to stabilize.
For beef producers hoping July’s reports would signal a clear turn in the cycle, the message from Peel is simple: This is more of the same, not a fresh start.
“There’s no big change in any of this. We didn’t start off on some new path here. We’re just continuing the same path we’ve been on,” he summarizes.
For producers looking ahead to fall marketing, Peel stresses that recent market volatility is a correction, not a change in the long-term trend.
“We’ve been in a really big correction here this past month — that’s the way I describe it,” he explains. “So nothing’s changed, is my message. We will bounce back. We’re not done with higher prices yet.”
The real hinge point, he says, will be when producers begin to save enough heifers to grow the herd.
“The peak in prices comes after we start saving enough heifers to actually rebuild the herd, and we haven’t done that yet,” Peel stresses. “The peak prices are not in 2026. They’re probably not in 2027. If we don’t start some heifer retention pretty soon in 2026, then not only are we not going to grow in 2027, we may not grow much in 2028.”
Until that shift happens, producers can expect a familiar pattern: tight supplies, an aging cow herd and underlying support for strong prices, even when short-term corrections rattle the market.
Listen to more of Linnell’s discussion with Rook on AgriTalk:
