The USDA released its bi-annual cattle inventory report on Friday, offering the latest look of the entire U.S. cattle herd. The total cattle inventory totaled 86.16 million head as of Jan. 1, down 0.4 percent year-over-year. That was the lowest total herd number for January since 1951. Friday’s estimate was in line with an Expana survey that expected a 0.3 percent decline.

The beef cow inventory totaled 27.61 million head, down 1 percent from January 2025. The number came in lower than expected, with the average analyst survey expecting a 0.4% increase. Additionally, the beef cow herd was the smallest since 1954. Dairy cows totaled 9.57 million head, up 2 percent from the previous year.

The beef cow inventory continued to contract in 2025 despite slaughter rates backing off substantially. Much of that could be attributed to the fact that heifer retention is failing to offset cow slaughter. Federally inspected beef cow slaughter totaled 2.35 million head, down nearly 18 percent year-over-year. Slaughter was also the lowest since 2015, when herd expansion was considered to have started in the previous cycle.

The number of beef heifer replacements totaled 4.71 million head, up 0.9 percent from a year ago, and the first increase since 2021. As expected, this year’s report showed minimal beef heifer retention. That also contrasts to 2015, when beef heifer retention was 9.5 percent higher year-over-year.

The limited expansion kept the calving number from increasing this year, implying a continuation of tight domestic supplies. The calf crop totaled 32.9 million head, down 1.6 percent year-over-year. Calves born in the first half of 2025 were estimated at 24.2 million head, while calves born in the second half were estimated at 8.70 million.

Cattle and calves on feed for slaughter totaled 13.85 million head, down 3.3 percent from a year ago. Feedlots with a capacity of over 1,000 head accounted for 82.7 percent of the total cattle on feed. The combined total of steers and heifers inside and outside of feedlots totaled 24.5 million head, up 1 percent Jan. 1, 2025.

Overall, Friday’s report proved to be slightly bullish compared to market expectations. As expected, the beef cow herd and heifer retention numbers confirmed that herd expansion has yet to occur on a notable scale.

In short, cow slaughter has slowed substantially over the past two years, but producers choosing to market heifers rather than retaining them for breeding have kept the beef cow herd declining. While the futures market attempts to predict the future, the backdrop of tight supplies and limited heifer retention remains a supportive factor for prices moving through 2026.

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