Record-Low US Cattle Supplies Challenge Feedlot Placements

The U.S. inventory of cattle and calves totaled 94.2 million head as of July 1, down one percent from July 2023, according to the USDA’s Cattle report on Friday. That was the lowest July inventory on record for data going back to 1973. Due to reduced USDA funding, there is no data for July 2013, 2016, and 2024. 

What was missing from the data was a better confirmation that herd rebuilding is taking place after years of liquidation. Lower beef cow numbers were apparent in the report, largely due to lower heifer replacements offsetting declining cow slaughter rates. The U.S. beef cow herd totaled 28.7 million head, down one percent from two years ago. 

Strong cull cow prices, which have been impressive, have kept cows moving through auction lots, largely due to strong lean beef demand. According to weekly USDA data, cow prices for 90% lean averaged $133 per cwt so far in July. Overall cow prices averaged a record $147 in May, trending higher across all regions as cull cow supplies remain tight. 

U.S. beef cow slaughter has backed off significantly this year and limiting supplies. Weekly data shows beef cow slaughter is down nearly 17 percent from 2024. Exuberant prices in the feeder cattle market have encouraged producers to hold onto cows. Anecdotally, there have been reports of feeders paying large premiums for newborn calves as soon as they hit the ground. 

Beef heifer replacements stood at 3.7 million head, down three percent from July 2023. Milk replacement heifers were unchanged from 2023 at 3.5 million head. 

The USDA’s July Cattle on Feed report, also released on Friday, showed that heifers represented about 38 percent of the feedlot herd between April and July. That percentage ticked back up from the April quarterly data and is still well above historical averages, indicating a slow process to hold heifers back for breeding. 

Consequently, the U.S. calf crop continued to decline, totaling 33.1 million head, down one percent from last year. Cattle and calves on feed for all feedlots totaled 13 million head on July 1, down one percent from two years ago. Overall, low cattle supplies are contributing to tightening beef supplies. 

Cattle on feed declining

As mentioned, the USDA released its July Cattle on Feed report last week. Despite rallying ahead of the report, Friday’s numbers continued to add bullish momentum to the market. 

The July 1 cattle feedlot inventory for operations with over 1,000 head totaled 11.12 million head, down about two percent from July 2024.

The inventory was lower than market expectations, which had expected only a one percent decline from last year. 

June feedlot placements fell eight percent to 1.441 million head and landed well below the average trade guess. June placements were the lowest since 2009. As suggested by the July Cattle report, calves outside feedlots have been declining, restricting supplies available for beef production. 

With restrictions on feeder cattle imports from Mexico and a declining calf crop, producers could struggle to fill feedlots as they battle higher prices and breakevens. 

Fed cattle marketings in June totaled 1.71 million head, down 4.4 percent year-over-year and were the lowest for the month in over two decades.

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