Has the Cattle Herd Reached a Low?
What’s Happened…
The most recent USDA Cattle Inventory Report released July 24 indicated the cattle herd as of July 1, 2026, may have finally stopped contracting after reaching a multi-decade low supply level. Cattle and calves were 94.2 million head, 200,000 more than 2025 for this same period. Heifers 500 pounds and over for beef cow replacement came in at 3.8 million, up 3%. Steers 500 pounds and over came in at 13.9 million, a 1% increase.
A myriad of factors may have contributed to the longer-term contraction of the herd, but most dominant were drought conditions in the western Plains, high feed costs, and aging cow-calf producers. As conditions became increasingly challenging, the herd gradually declined. In recent years, an uptick in the dairy herd has helped supply beef to the marketplace. Upward trending prices for both live and feeder cattle, despite more dairy on beef, reflected the reality of a shrinking beef herd.
A somewhat odd economic environment evolved, which likely limited a more rapid herd expansion. The price paid to producers for heifer calves was so strong that an incentive to market animals rather than build the herd extended the trend of declining supply. The “bird in hand” mentally kept stronger cash flow to the cow-calf operator. The risk of holding back expensive heifers weighed on the decision-making process. The concept of high prices curing high prices didn’t readily increase the herd (and still has not). Nonetheless, expansion will likely occur. Expect, however, herd growth to be slow.
Why this is Important…
The risk of buying high-priced feeder cattle is greater than ever. Feed prices have remained relatively stable over the last three years. Yet, by many accounts, feed prices remain cheap. That may not always be the case. Big world crops in recent years do not guarantee future record crops. A bump in consumer demand for proteins helped drive beef and, therefore, live cattle prices to record highs. Questions that matter need to be asked. Will the increase in demand hold? Is it a fad? Will feed costs remain manageable?
Managing the risk of higher feed costs and potential for lower demand for beef prices needs to be intentional and diligent. Buying feeders and betting on higher live prices down the road could be a recipe for a financial train wreck.
What can you do about it?
A basic, and perhaps obvious conclusion is to be careful in buying feeders. Emotional purchases and paying too much just to have cattle in a lot is not a good reason to buy. The numbers need to make sense. There is always risk. Keep it reasonable. If the board offers reasonable gains, take them. Don’t get greedy. Use the right marketing tool at the right time. Conversations with your buyer or market advisor can guide you in the right direction to make informed risk management decisions. Lastly, don’t be afraid to walk away. There may be better days ahead. The idea of always having constant supply of animals on hand needs to be challenged.
Find out what works for you…
Work with a professional to find the strategy or strategies that are best suited for your operation. Communication is important. Ask critical questions and garner a full comprehension of consequences and potential rewards before executing. The idea is to make good decisions for the operation and less emotionally–charged responses to market moves, which are always dynamic.
About the Author: With the wisdom of over 36 years at Total Farm Marketing and following across the Grain Belt, Bryan Doherty is deeply passionate about his clients, their success, and long-term, fruitful relationships. As a senior market advisor and vice president of Brokerage Solutions, Doherty lives and breathes farm marketing. He has an in-depth understanding of the markets and marketing tools, an excellent listener, and communicates with intent and clarity to ensure clients are comfortable with their decisions.
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Bryan Doherty