The USDA released its January Cattle on Feed report on Friday, which continued to show limited heifer retention despite declining feedlot supplies. The Jan. 1 feedlot inventory totaled 11.45 million head, down 3 percent year-over-year. Supplies came in below market expectations, driven by a surprise increase in cattle slaughtered in December.

There continues to be a stark difference between northern and southern states. Feedlot supplies are 9 percent lower in Texas and 10 percent lower in Oklahoma compared to a year ago. Meanwhile, Iowa and Nebraska experienced an increase of 5 percent and 2 percent, respectively. That dichotomy has to do with limited feeder supplies in the south amid the ban on cattle imports from Mexico.

Quarterly data showed that the number of heifers on feed totaled 4.44 million head, representing about 38.7 percent of the total inventory. Heifer slaughter fell 5.3 percent in 2025 compared to a year ago, but the percent of heifers in feedlots remained at historically high levels as steer slaughter showed similar declines. Quarterly data suggest that the USDA’s cattle inventory report at the end of the month will likely show limited heifer retention.

December feeder cattle placements totaled 1.55 million head, down 5.4 percent from a year ago. That was the lowest December placement number since 2014. Analysts had expected a 6.9 percent drop, but an unwillingness to retain heifers likely drove higher-than-expected placements during the month. Texas even showed a surprise 10 percent increase in placements for the month. However, monthly placement data continues to show tight feeder cattle supplies across the U.S.

Fed cattle marketings in December totaled 1.77 million head, up 1.8 percent from a year ago. Marketings were much higher than market expectations, which had anticipated an 11.5 percent decline. A large number of market-ready cattle in feedlots led to stronger-than-expected fed cattle marketings last month.

Overall, Friday’s report seemed neutral for the market after showing no wild surprises in the feedlot inventory or placement numbers. The numbers continued to show a tight supply outlook for the U.S., which has kept beef supplies at historically low levels.

—

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. FUTURES TRADING INVOLVES SUBSTANTIAL RISK AND IS NOT SUITABLE FOR ALL INVESTORS.