The USDA’s December Cattle on Feed report offered no new surprises but continued to confirm underlying market fundamentals - overall tightening feedlot supplies. The Dec. 1 feedlot inventory totaled 11.727 million head, down 2.1 percent year-over-year. The inventory was slightly lower than market expectations, as well as the lowest since 2017.
Last month’s report showed that heifers still represented a relatively large percentage of the feedlot inventory, suggesting a limited number of heifers are being kept back for breeding.
Feedlot placements were lighter than expected this month, with November placements falling 11.2 percent from a year ago to 1.595 million head. That was also the lowest November print since the USDA began reporting the data in 1996. Lower placements in Arizona, Colorado, Kansas, and Texas drove the decline.
Feedlot placements have been hit hard, particularly in the south, due to the Mexico border closure. A short-term reopening allowed cattle flow into the U.S. earlier this year before screwworm was detected closer to the U.S.-Mexico border, causing a reclosure. Feeder cattle imports for the first eight months of this year reached 324,653 head, sitting 69 percent lower than the same period last year.
Fed cattle imports from Canada have been declining this year after hitting the highest in a decade in 2024. Fewer supplies traveling from north of the border also limit domestic beef production, even as imports are still above the five-year average. Herd liquidation in Canada played a large role in sending additional cattle supplies to the U.S. over the past few years. Declining feedlot supplies north of the border likely mean that fewer head are making their way to U.S. processing facilities.
Record-low placements have also been the result of tight feeder cattle supplies. Total beef cattle inventories are the lowest in decades. Feedlots continue to bid aggressively for feeder cattle to fill pens, keeping prices well supported.
Fed cattle marketings totaled 1.521 million head in November, down 11.8 percent from last year and the lowest since 2014. While total markets and slaughter rates have declined significantly from previous years, cattle weights have been climbing to new records, supported by relatively cheap feed costs.
Declining Beef Supply
Declining feedlot supplies have driven lower production, with output totaling 26 billion pounds, the lowest since 2017. Despite declining production, total U.S. beef supplies are expected to remain relatively flat between the next couple of years, largely due to imports. For the 2025 calendar year, the total U.S. beef supply is forecast at 31.96 billion pounds, 1 percent lower than a year ago. Supplies are forecast to decline another half a percent in 2026 to 31.84 billion pounds.
Imports will represent a record 16.7 percent of total beef supplies in 2025. That share is expected to grow to another record of 17.1 percent following the Trump administration’s tariff reduction on beef imports this month. It’s likely imports will remain strong to meet domestic beef demand, especially as cow slaughter, a primary source of lean meat, remains about 18 percent below last year.
Summary
Again, Friday’s report confirmed what everyone in the cattle industry already knew - tighter feedlot inventories amid historically low cattle numbers. Substantially lower beef cow slaughter suggests that cattle herd liquidation has reached or is nearing its peak. However, the high percentage of females in feedlots suggests that herd expansion has been slow. Feeder cattle supplies could tighten even further as producers begin holding back a notable number of heifers.
Beef packers have had to bid aggressively to secure fed cattle, with strong competition for limited supplies leading to recent plant closures. Even as record cattle weights and beef imports have helped buffer declines in the total beef supply, undeniably low North American beef cattle numbers should continue to keep cattle prices supported heading into next year.
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