USDA‘s latest cattle inventory report confirmed continued supply constraints for the US beef industry, with the 2025 calf crop falling 1.6% below 2024 levels to just under 32.9 million head.

The decline came in below the average pre-report expectations from analysts and traders, signaling tighter beef supplies will persist through 2026.

Beef cow inventories stood at 27.61 million head as of January 1, 2026, down 1.0% from the prior year. The figure fell short of analyst forecasts that had expected a modest year-over-year increase.

The supply pressure stems from a downward revision to the 2024 calf crop, now showing a 0.4% decline from 2023. The 2025 calving rate dropped 2.0% to reach the lowest level since 2020, following what had been the highest calving rate since 2002 in 2024.

Replacement beef heifer inventories weighing 500+ pounds increased 0.9% year-over-year as of January 1, 2026, providing evidence of heifer retention for breeding purposes. Combined with depressed beef cow slaughter levels, this sets the groundwork for beef cow inventories to trend higher by January 1, 2027.

Dairy cow inventories posted a 2.0% increase to 9.57 million head as of January 1, 2026.

LEAP Market Analytics projects the 2026 calf crop could increase 0.4% from 2025 levels, which would mark the first increase since 2018. The projection assumes an average calving rate of 87.7%, roughly in line with the six-year average from 2020-25.

Commercial beef production in the US is expected to run below prior-year levels in 2026, though production deficits should moderate as the year unfolds. Sharply higher finishing weights remain a positive factor for overall beef output and should continue through the balance of 2026.

Looking to 2027, an early outlook projects a 2.5% rebound in commercial beef production. However, this assumes a relatively normal marketing pace, potentially including catch-up from the recently sluggish pace. If feedyards and packers continue facing current margin pressures, that normalized pace is unlikely.


This article is part of a more comprehensive beef market analysis. For the full analysis, visit: https://app.vespertool.com/market-analysis/2656