Persistent drought across the Texas Panhandle and neighboring cattleproducing states is pushing ranchers to sell off their herds, driving the national cattle inventory to its lowest level in 75 years. Total U.S. cattle inventory dropped to 86.2 million head The drought is affecting Texas , Kansas, Oklahoma, Colorado and parts of New Mexico. Herd expansion is not expected in the near term. Persistent dry weather across West Texas and the Panhandle has severely depleted grass and forage, leaving ranchers no choice but to send cattle to auction. January placements in Texas feedlots dropped to a recordlow 290,000 head, with overall cattle on feed down by roughly 7%.
Meanwhile, Texas continues to lose over 1,000 acres of working agricultural and grazing land daily to urban expansion, solar installations and nonagricultural developments. Total cattle inventory increased slightly for the first time since 2018, but the beef cow herd fell to 28.5 million head, a record low for the July report, indicating herd rebuilding remains limited.
Replacement heifer numbers improved, but the calf crop remains historically small. Beef replacement heifers increased 3%, suggesting farmers and ranchers are beginning to retain females for breeding. However, the 2026 calf crop is projected at a record-low 32.5 million head, marking the ninth consecutive annual decline and constraining future herd growth.
Feeder cattle supplies are expected to remain tight through 2027. Lower calf numbers and declining feedlot placements point to fewer feeder cattle available in the coming years. While the reopening of the U.S.Mexico border will gradually increase feeder cattle imports, supplies are still expected to remain historically tight.
Tight cattle supplies remain supportive for longterm cattle prices, but recent declines in boxed beef values and the reopening of cattle imports from Mexico have added pressure. Cattle prices have fallen sharply in recent weeks, though improving packer margins may help support processing activity going forward.
USDA’s July Cattle Inventory report offers a critical midyear snapshot of the U.S. cattle herd, including an estimate of the year’s calf crop. Released in tandem with USDA’s monthly Cattle on Feed report, the two datasets together provide a more comprehensive view of supply trends and herd dynamics.
The combination of declining placements and slower marketings suggests cattle are remaining in feedlots longer, contributing to heavier market weights. Slower slaughter rates have also allowed market-ready supplies to build in feedlots, while packers have reduced processing schedules amid tight cattle supplies and compressed margins. As a result, cattle are being fed to heavier weights before entering the packing sector, partially offsetting the impact of lower cattle inventories on beef production.
Mexico typically exports between 1.2 million and 1.5 million head of feeder cattle to the United States each year. These cattle are an important component of the U.S. beef supply chain, moving from border crossings into feedyards across the country before eventually entering packing plants.
This trade was disrupted in November 2024 when the United States closed the border to livestock imports following the detection of New World screwworm (NWS) in southern Mexico. As of this article’s posting, there have been 42 confirmed NWS detections in the current U.S. outbreak: 41 cases in Texas and one in New Mexico.