As of Jan. 1, 2026, the U.S. beef cattle herd stands at 86.2 million head, continuing a downward trend. Despite a year of strong prices, USDA’s annual Cattle Inventory Report released Friday shows the U.S. cattle inventory shrank another 0.35% and now sits at its smallest size in 75 years.
“I would say the story continues,” summarizes Derrell Peel, extension livestock marketing specialist from Oklahoma State University. “I mean, it really doesn’t change the pattern that we’ve been in for the last three years now.”
Quick Report Stats:
- Total Cattle and Calves Inventory: 86.2 million head (Down 0.35%)
- Beef Cow Herd: 27.6 million head (Down 1%)
- 2025 Calf Crop: 32.9 million head (Smallest since 1941)
- Beef Replacement Heifers: 4.71 million head (Up 1%)
Patrick Linnell, CattleFax director of market research, calls the report bullish.
“I think the big picture message of this report is expansion, while there was some signs of it within this report, by and large expansion remains elusive at this point,” he says.
What Are the Big Takeaways from the USDA Report?
According to Peel, the data highlights two critical areas:
1. Shrinking Cow Herd: The beef cow inventory fell 1% to 27.6 million head.
“The industry technically got a little smaller in 2025,” Peel says.
Linnell adds, “As you looked at just how tight beef cow slaughter was this past year, us and other groups had expected we would actually see an increase in the beef cow herd. Small, but an increase nonetheless. However, that’s not what this report showed.”
2. Heifer Retention Signs: Beef replacement heifers rose 1% to 4.71 million.
“There was a slight uptick in beef replacement heifers, not enough to amount to any growth in 2026, or probably even in 2027, but maybe it’s the beginnings [of a rebuild].”
John Nalivka, Sterling Marketing Inc. president, says the report indicates while replacement heifers was up 1% and those expected to calve were also up 1% from 2024 or 17% of the beef cow herd.
“From 2015 to 2018 when producers began aggressively building herds, the average number of heifers that were identified as replacements on the Jan. 1 inventory was 6.2 million or an average heifer retention rate of 21%,” he explains.
Nalivka says heifer slaughter during 2025, at 9.5 million, was down 7% from the prior year but still represented 52% of the heifers weighing more than 500 lb. on Jan. 1, 2025. In 2024, the industry slaughtered 56% of the January 1 heifers weighing more than 500 lb.
“When the industry was retaining heifers to build herds, the percentage of heifers weighing over 500 lb. that were slaughtered ranged from 39% to 49%,” he adds.
Why is the 2025 Calf Crop Significant?
The calf crop estimate was reduced to 32.9 million head — a 2% drop from 2024. This marks the smallest U.S. calf crop since 1941. This scarcity will be the primary driver for market dynamics in the coming years.
The calf crop in 1941 was approximately 31.8 million head. While the industry saw a significant liquidation in 2014, the calf crop that year only dropped to roughly 33.5 million. This means the current contraction has pushed production levels back more than 80 years.
Outlook: What Will Cattle and Beef Prices Do in 2026?
Peel predicts the small calf crop and tightening feeder supplies will push prices even higher.
“We’ve got record-high prices, and we’re going to see them push even higher for cattle and beef,” Peel says.
He reminds producers it’s important to keep in mind that it’s not just about supply.
“Demand has also continued to be remarkably good for beef as prices have gone up,” he says. “Beef prices have increased relative to pork and poultry. There are alternative proteins that consumers could be turning to, and they’re not. So that’s a very positive sign from a beef industry standpoint.”
Read more about beef demand:
Beef’s Future: Consumer Demand, Risk Management and the Path to Continued Profitability
Consumer Craze for Protein Drives Beef Demand
The “Historically Slow” Rebuild
Unlike the rapid expansion seen 10 years ago, Peel expects this cycle to be much slower. Producers are cautious, remembering how quickly record prices vanished in the past.
“I do think we’re probably beginning, but it’s certainly not a concerted effort,” Peel says. “There’s not a strong, broad-based initiative in the industry. It will probably grow, but I think it’s going to continue to grow pretty slowly.”
He explains the industry has outlasted the previous cycle highs by two-plus years.
“I think producers are coming around to the idea that this is a more sustained story,” Peel says.
What is the Take-Home Message for Producers?
The market is signaling a desperate need for a rebuild.
“The incentive is there, the value of forage is there,” he says. “If you’ve got forage you can use to raise calves, the market wants you to do that. And if you aren’t fully stocked, then it’s encouraging you to think about doing that. I think the main message for producers is to take advantage of this market.”
He also encourages producers to maintain the productivity of their herds.
“We have cut cow culling so far in the last two to three years that some of these cows are going to have to be culled going forward,” he explains. “So, we got to have a few more replacement heifers just to maintain the productivity of the herd. Take care of that first and then if you need to restock. I understand the tradeoff between selling them now for what is a record price versus investing in the future, but you know, sooner or later, we have to make that investment and look a little bit farther down the road.”
Other January cattle report highlights include:
- Of the 86.2 million head inventory of all cattle and calves, cows and heifers that have calved totaled 37.2 million.
- The number of milk cows in the U.S. increased 2% to 9.57 million.
- The number of cattle on feed was down 3% to 13.8 million.
Nalivka adds, “Only time will tell as the year progresses to determine if USDA’s Cattle Inventory is on track. One cross-check will be cattle slaughter which is an actual number reported to USDA by the packers. The inventory is generated from an annual survey number. I understand that USDA aligns annual surveys with the five-year Agricultural Census. To say the least, I have greater confidence in numbers reported to USDA that can cross-check the validity of the survey.”
He does not expect the Cattle Inventory Report to have an impact on cattle numbers or the market going forward through 2026 and into 2027, particularly with a 2% smaller 2025 calf crop.
“Numbers will continue to tighten and when coupled with continued strong demand for beef will support the market at levels at and likely above the market peak seen during third quarter 2025,” he summarizes.
Glynn Tonsor, Kansas State University ag economist, posted on LinkedIn his analysis of the report. He shares state-level beef cow inventory estimates (of seven states with more than 1 million head) Kansas’ 7% decline stands out while Missouri, Montana, Nebraska and Texas are estimated to be down 1-3% and Oklahoma and South Dakota are flat. Only Texas has a sizeable increase in estimated replacement heifers.
He shares two broader points:
- While it certainly is valuable to count the number of beef cows, understand status of herd expansion, and other factors that is far from a complete story on industry supply dynamics. In short, the industry has implemented a number of efficiency gains resulting in the net effect of more edible beef production per cow in the industry.
- It has become way too common to focus on supply and overlook demand dynamics. In fact, recent work with Brian Coffey documents how recent beef price patterns have been impacted more by strong consumer beef demand than any supply-side adjustments.
Analyzing the inventory numbers Peel summarizes, “It’s just amazing to me that we continue down this path. We’ve kept extending the timeline. You know, technically, with the beef cow herd and the way we look at cattle cycles, I thought 2025 would turn out to be officially the low. Well, now we’re even smaller in 2026, so we will have to wait until next year’s number to see whether this is the low. We just keep pushing this timeline out that provides even more opportunities for producers to take advantage of this market.”
Bi-annual Cattle report would be called lightly positive. 1) There was no sign of any type of January 2015 expansion (retained beef heifers +9.5%). 2) Overall, numbers came in just below the four analyst expectation. pic.twitter.com/lvNaDBusz3
— Rich Nelson (@RichNelsonMkts) January 30, 2026
To obtain an accurate measurement of the current state of the U.S. cattle industry, NASS surveyed approximately 35,000 operators across the nation during the first half of January. Surveyed producers were asked to report their cattle inventories as of Jan. 1, 2026, and calf crop for the entire year of 2025 by internet, mail, telephone or in-person interview.
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