USDA National Agricultural Statistics Service (NASS) released the semi-annual July 1 Cattle inventory report July 24. The current and past reports are available online.

NASS pegged the July 1 U.S. beef cow herd at 28.45 million head, down 200,000 head from the 28.65 million last year. The eight straight years of July 1 beef cow liquidation resulted in the smallest inventory in the series going back to 1973. That decline signals a continuation of short cattle supplies for at least another year.

The July 1 beef cow estimate is usually higher than the previous Jan. 1 estimate with the addition of first-calf heifers calving, but this year’s 3% increase from 27.6 million to 28.45 million has historically meant some expansion occurring. Improved moisture conditions in several important beef cattle producing regions, record high cattle prices, and beef cow slaughter down 16% this year may have been conducive to some interest in beef herd rebuilding.

While beef cow numbers declined 200,000 head, milk cow numbers countered with a 200,000-head increase from 9.45 million head on July 1, 2025, to 9.65 million in 2026. That increase may highlight the role that beef-on-dairy genetics is having on resilient U.S. beef production in spite of the declining beef cow herd.

Beef replacement heifers were estimated at 3.8 million head, up 2.7%, but still the second smallest since July 1 records began in 1973.

While some producers are retaining more heifers where moisture conditions allow it, significant expansion is not yet occurring. USDA reported 46% of cattle resided in drought conditions on July 1, 2026.

Calf and feeder cattle supplies

The July Cattle report did provide very important information on potential calf and feeder cattle supplies and future beef production. It was the first estimate by NASS of the 2026 calf crop. The calf crop, which includes both beef and dairy calves, at 32.5 million head is projected to decline 1.5% from just under 33 million head last year. 

July 1 residual feeder cattle supplies outside feedlots was estimated to be 33.6 million head, down from 33.8 million last year and the lowest in many years. That, coupled with a potential increase in beef heifer retention, will cause historical tight supplies.

The smaller calf crop and tight feeder cattle supplies will mean fewer cattle marketed and declining beef production. USDA is predicting 2026 beef production to fall to 25.36 billion pounds (lb.) from 26.07 billion lb. in 2025, with another decline to 25.27 billion in 2027.

Fall feeder cattle supplies will likely be affected by USDA’s July 24 announcement that a phased reopening of the Mexican border for cattle imports would begin on Aug. 24. The initial opening will be the Douglas, Ariz., port, with New Mexico ports at Columbus and Santa Teresa opening potentially at a later date.

Prior to the ban, Mexican cattle accounted for about 5% of U.S. feedlot placements. But it adversely affected feedlot and packing plant capacity in the Southern Plains. The initial flow of Mexican cattle will likely be slow and well below pre-ban levels.

Cattle on Feed in U.S. feedlots on July 1, 2026, increased to 13.2 million head from 13 million in 2025. The increase was due to slow feedlot turnover contributing to increased days on feed, higher carcass weights and enhanced beef production.

Tighter cattle supplies will be supportive to fall calf prices. But there are many uncertain supply and demand factors causing the cattle market to be quite volatile.

Marketing plans with price risk management strategies that set a floor price, but leave the top side open should be considered.  

Editor’s note: Tim Petry is a livestock marketing economist with the North Dakota State University Extension Service.