The U.S. cattle feeding industry is experiencing a period of tighter supplies with the feedlot inventory on Feb. 1 reported at 11.5 million. Historically tight domestic supplies and a disrupted Mexican cattle supply chain continue to cause havoc for cattle feeders.
The recent announcement that Lubbock Feeders, a 50,000-head capacity yard in Texas, will cease operations highlights the growing pressure on the sector.
According to EverythingLubbock.com, the decision follows a series of economic and regulatory challenges that have significantly impacted operations.
The article reports typically between 60% and 70% of the yard’s cattle inventory originated from Mexico. With the U.S.-Mexico border closed due to the threat of New World screwworm, the feedlot has lost its critical supply chain.
The feedlot plans to finish feeding out its remaining cattle currently on-site before ceasing operations. According to the article, management hopes the property itself will remain in agricultural use, preserving at least part of its legacy.
“Unfortunately, it’s not really a surprise,” says Derrell Peel, Oklahoma State University livestock marketing specialist. “Tighter feeder supplies are squeezing feedlots more and more. Given that this feedlot depended so heavily on Mexican feeders, it really puts them in a bind. Also, they are located pretty close to the city of Lubbock, so I suspect they faced growing pressure and environmental concerns.”
By the Numbers: The February Cattle on Feed Report
The latest USDA Cattle on Feed (COF) report was released on Friday. Peel summarizes the report “was well anticipated and did not contain any surprises for the market.”
This marks the 15th consecutive month of declining total cattle on feed.
Here are some key takeaways from the COF report:
- Total Inventory: 11.505 million head (down 1.8% year-over-year)
- Placements: Down 4.7% year-over-year
- Marketings: Down 13% (impacted heavily by January winter storms)
How is the Cattle Feeding Industry Structured?
Peel explains the industry is divided between a large number of small family-run lots and a small number of high-capacity commercial feedlots. The U.S. currently has 26,082 feedlots.
- Small Feedlots (less than 1,000 head): Comprise 92% of all feedlots but account for only 12.9% of total marketings. Average marketings from small feedlots were less than 126 head for the year.
- Large Feedlots (more than 1,000 head): Comprise 8% of feedlots (2,082) but account for 87.1% of marketings.
- The “Big Players": Feedlots with a capacity of more than 50,000 head (82 feedlots) represent only 4% of the industry by count but market 41% of all fed cattle.
Figure 1 shows the size distribution of feedlots with more than 1,000 head capacity. It illustrates that 60% of more than 1,000-head feedlots have between 1,000 and 4,000 head of capacity.
Figure 2 shows that these feedlots only account for about 9% of marketings.
Utilization and 2026 Outlook
Total U.S. feedlot capacity is estimated at 17.1 million head, a figure that has remained relatively stable since 2018. However, utilization is dropping as the cattle cycle bottoms out.
- Current Utilization: On Jan. 1, total feedlot inventory utilized 81% of capacity.
- Large Lot Utilization: Feedlots with more than 1,000-head capacity utilized 67% of total capacity.
Figure 3 shows that the cattle feeding industry has grown relative to the overall size of the cattle industry.
The industry faces a tightening supply of feeder cattle. As 2026 begins, 16.1% of all U.S. cattle are in feedlots.
- Estimated Feeder Supply: 24.5 million head.
- Supply Gap: There are 1.77 head of feeder cattle available for every one head currently in a feedlot.
Peel says with a feedlot turnover rate of 1.99, the current supply of feeder cattle is insufficient to maintain current feedlot inventory levels.
“We may see more feedlot closures,” Peel summarizes, suggesting the industry may face further consolidation as feedlots compete for a dwindling pool of calves.
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