With the release of the Cattle on Feed report and Cattle Inventory Report
on Friday, data shows the nation’s cattle herd is still not expanding and feedlot placements continue to decline.
The exciting news for cattle producers is that based on the reports, Don Close, Terrain senior animal protein analyst, predicts cattle producers have not seen the highest cattle prices, yet.
“While I don’t think we’ve seen the high water mark of this market, I do not think we’ll continue to see prices escalate at the rate we have for the year to date,” he says.
Cattle on Feed Shows Bullish Placements
The on-feed total was 11.1 million head, down 1.6% from a year ago, the lowest in eight years. Placements were down 8%, the lowest in 16 years.
Derrell Peel, Oklahoma State University Extension livestock marketing specialist, says, “The placements came in substantially less than expected and as a result of that, it did change the on-feed number to about half a percent less than expected.”
Close adds, “If you look at the decline in placements, specifically Texas, and those Southern feeding states, and the implications we’re getting because of the border closure, to me, that’s the real story in the long-term ramifications to the market.”
He says the state-by-state breakdown confirms Texas placements down 18% compared to last year, Oklahoma down 27% while Iowa is up 21%.
“I think that’s going to have a big impact on the north to south price spread that has been such a big issue in the market through 2025 year to date,” he explains.
Kenny Burdine, University of Kentucky livestock agriculture economist, says: “The surprise of this quarterly Cattle on Feed report was June placements, which were down 8% from 2024 and outside the range of expectations. Marketings continue to suggest we may be pulling cattle ahead, but placements suggest we are not replenishing them at the same pace.”
Heifers, as a percentage of on-feed inventory, came in at 38.1%. This is about a percent and a half lower than July 1, 2024, but up about half a percent from April of this year.
“Much like the beef replacement heifer estimate from the inventory report, this does not suggest much retention is occurring,” Burdine says. “Any growth in beef cow numbers is coming from reduced cow slaughter.”
Cattle Inventory Down 1% from 2023
The cattle inventory report was compared to 2023 since last July’s report was cut. Close says it shows the smallest herd on record, with all cattle and calves down 1% at 94.2 million head.
He says the calf crop at 33.1 million is the biggest market signal.
“The real critical number is the calf crop number,” Close says. “That was down 1% so it still shows, you know, we’re going to see additional limits on the available number of potential placement or available cattle outside of the feedyard, again in 2026.
Ag Economists Weigh in
Following the release of the reports on Friday, seven university agriculture economists shared their perspectives after reviewing the data:
Will Secor, University of Georgia
“The July Cattle and Cattle on Feed reports from USDA provided indications that the cattle herd is approaching a low in inventory but may not be there just yet. The mid-year cattle report provided a first estimate of the 2025 calf crop, which is projected to be roughly 1.3% smaller than the 2024 calf crop. Combined with January’s report of fewer beef cow replacement heifers, this is an indication that the cattle herd may still be smaller come January 2026. However, the Cattle on Feed report indicates that the share of cattle on feed that are heifers declined again year-over-year to its lowest July reading since 2019. Overall, these reports show a continued decline in the cattle inventory, but they also shed some light on the potential of a rebuild that may be starting soon.”
Kenny Burdine, University of Kentucky
“The fact that there was no mid-year inventory report in 2024 makes comparison a bit difficult. Beef cow inventory was down by 1.2% from July of 2023. Most were expecting beef cow inventory to be down a bit more over the last two years, but I think this speaks to how much lower beef cow slaughter has been running. For the 12 months from July 2024 to June 2025, nearly 650,000 fewer beef cows were harvested than from July 2023 to June 2024. I think it’s likely that beef cow inventory was down by more than that from July 2023 to July 2024 but increased over the last 12 months due to lower slaughter levels. Heifers held for beef cow replacement were down 3% from 2023, which is a decrease of 100,000 head. The best way to think about this number is to consider it as a percentage of beef cow inventory. When looking at it that way, our heifer retention pace is lower than it was in 2023.”
Andrew Griffith, University of Tennessee
“I don’t really know what to say about these reports. A lot of the time we discuss industry estimates compared to USDA estimates. The main thing in this report is we saw lower beef cow numbers, a smaller calf crop, and fewer cattle on feed. The one thing I feel certain is that the competition for cattle is going to be fierce the next couple of years. I think we will see closures, idling or consolidation of packing plants and feedlots. Even if that does not happen, capacity utilization is going to be small. This also feeds back to stocker and backgrounders who will be growing a smaller number of cattle than usual, which will influence profitability.”
Josh Maples, Mississippi State University
“I don’t see significant signs of expansion from these reports. Heifers held for beef cow replacement were down 3% from the 2023 report. The 5% drop in heifers placed into feedlots during the last quarter is the number that jumps out as the question mark. But, taken with all of the other data, I’m not yet ready to call it an obvious sign of expansion. After accounting for fewer imports from Mexico, heifer placement is down 2.5% during the first half of 2025 compared to the first half of 2024. It could just be that we have fewer heifers due to smaller calf crops and that there are some differences in placement timing. The overall percentage of heifers on feed ticked back up to 38% after dropping in the previous quarter. I think 2025 is likely a stabilization year for beef cow inventory, with 2026 having the higher odds for modest expansion if pasture conditions cooperate.”
Hannah Baker, University of Florida
“While the 2025 July inventory report does not include state breakdowns, the numbers reported in both the inventory and Cattle on Feed reports reflect what is happening across Florida: Some producers are thinking of and starting to retain heifers, but the majority are still capitalizing on record-high calf prices. Beef replacement heifers are down 3% from 2023, and the beef cow herd is smaller by 350,000 head. The number of other heifers over 500 lb. is also 3% lower than 2023, meaning there is also a smaller pool of heifers to pull from for any impulse breeding in the back half of 2025 and early 2026. Signs of slow heifer retention are also shown in the Cattle on Feed report, where the number of heifers on feed was 5% lower than 2024, but the percentage of heifers on feed rose by 0.5% since April to 38.1%.”
James Mitchell, University of Arkansas
“A statistic I like to track is the ratio of July beef replacement heifers relative to the previous year’s calf crop (as estimated in the January report). I use this as a crude indicator of retention and potential herd expansion. The estimate for July 2025 is 11.04%, nearly identical to July 2023 at 11.03%. For comparison, the ratio was 14.32% in July 2015. We’re not there yet, which makes me wonder: With strong profitability over the last few years, are producers reinvesting in other ways — farm infrastructure, equipment, land?”
Charley Martinez, University of Tennessee
“It’s unfortunate that we didn’t have last year’s July 1 report. But, when looking at the percentage of changes between 2023 and 2025, I think the trends were expected. The most interesting statistic to me was the expected 2025 calf crop of 33.1 million head. The calf crop was 33.56 million in 2023, and 33.52 million in 2024. The calf crop expectation highlights the impacts of the shrinking herd over the last two years, and the expected tighter feeder calf supply signals continued elevated feeder calf prices. This report also starts the excitement for the Jan. 1 report, where we will have statistics and more detailed data.”
“It’s bullish,” Close summarizes, “both the on-feed and inventory reports, I don’t think there’s any getting around the fact they’re bullish.”
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