December placements of cattle on feed reached 1.55 million head, representing a 5.4% decline from the prior-year total, as feedyards facing margin pressure reduced replacement stock sourcing.
The December placement figure landed within analysts’ expectations and extended a seven-month streak of deficits compared to model-implied estimates of feeder cattle that should have been available. The total represented a deficit of nearly 130,000 head to the expected number of placements.
Restricted access to feeder cattle from Mexico contributed to recurring placement deficits, though the impact was negated in December as imports from Mexico remained at zero, matching December 2024 levels. Feedyards faced a margin crunch with cash returns at their lowest point in a year during the month and implied forward returns deep in negative territory.
The January 1 inventory breakdown showed 4.44 million heifers and heifer calves on feed, representing 38.7% of the overall total. This marked an increase from the 38.1% share reported on October 1 and remained steady compared to last year. The heifer share of inventories indicates ranchers are not yet holding back heifers for breeding purposes at levels that would signal a herd rebuilding effort.
Marketings of fed cattle declined 1.8% in December, broadly tracking the sharp drop in placements. The marketing pace creates risk that total inventories of cattle on feed could recover steadily on a year-over-year basis if the pace doesn’t quicken in 2026.
Analysts project total inventories of beef cows that have calved to be down 1.8% from a year earlier on January 1 at 27.35 million head. Replacement beef heifers weighing 500+ pounds are projected to post a 0.5% decline from last year on the same date.
Continuing year-over-year deficits in monthly placements are expected through the first half of 2026, though at a moderating pace. Modest to moderate increases are projected for the second half of this year, resting on two primary assumptions: a backlog of domestic weaning-age calves will eventually need to clear, and access to feeder cattle from Mexico will open up gradually.
For a meaningful herd rebuilding effort to begin, the heifer share of cattle on feed inventories would need to fall into the 36-37% range or lower, similar to levels seen in 2014-15 when the last major expansion occurred.
This newsarticle is part of a more comprehensive beef market analysis. For the full analysis, visit: https://app.vespertool.com/market-analysis/2635