USDA released the July 1 Cattle Inventory report on Friday, July 24, which showed a growing dairy cow herd (no surprise there) and a decline in beef cow numbers. The number of heifers for beef replacement, however, grew from a year ago, indicating beef producers have begun to rebuild the herd.
Diving into the data, dairy cows counted to 9.65 million as of July 1, a gain of 200,000 head from July 1, 2025 (+2.1% YoY), as the remarkable growth in herd size continues. At some point, processing capacity will be filled, slowing the unprecedented growth in the dairy herd, but for now, strategies like drying cows off early and milking twice per day rather than three are allowing farmers to increase cow numbers while still staying within their base limits.
For the first time since 2018, heifers for milk cow replacement increased, rising by 100,000. While this is still a low figure historically speaking, it does indicate dairies are maintaining stocks and have slightly altered breeding strategy. Beef heifers for beef cow replacements were up by the same 100,000 YoY, following the same trend from the January 1 Cattle report. This will eventually help to take a small bit of pressure off the depressed beef cow numbers.
For beef, the number of beef cows in the US fell to the lowest number in the July dataset: 28.45 million head (-0.7% YoY). The previous three July reports, issued in 2022, 2023, and 2025, all rank in the bottom five since 1971, the starting point of the July 1 set, highlighting the dwindling numbers. The US beef herd has been shrinking since 2018. Some of this is due to attrition because of long-term drought, and some is due to genetic gains. But producers have begun to rebuild the herd, as evidenced by the 3% YoY gain in heifers for beef cow replacement. Also telling was the drop in “other heifers”, which are earmarked for slaughter, rather than as replacement animals. The survey reported 7.3 million of these animals, down 100,000 YoY. This decrease also indicates more animals are being added to the breeding stock.
Inventories of steers, which will be used for meat, showed some positive growth. Steers that were 500 pounds and over totaled 13.9 million, increasing by 100,000 from July 2025, a very modest gain. The number of cattle on feed also increased, up 200,000 YoY, to 13.2 million, fitting with the market chatter that feedlots and processing capacity are full. In recent years, steer carcass weights have increased significantly. Due to high prices for feeder cattle, producers are keeping animals on feed for longer, pushing weights higher and improving their Yield Grade. More feed equals more fat, with now nearly 90% of finished cattle grading Choice or better, a huge boost in quality. All this is to say, producers have found a way to make the most out of their situation and may reduce the need for more animals in the feedlots in order to get the same quantity of beef. CME feeder cattle futures have fallen in recent weeks due to this need for fewer animals. Even so, feeder cattle futures remain historically high as this shift in days on feed and carcass weights is not enough to materially change the dilemma of a small overall beef supply.
The preliminary calf crop figure for 2026 totaled 32.5 million, down by about half a million from 2025 or 1.5%. This is the largest decline since 2023. That said, the calf crop has been down annually in most years, 39 to be exact, since record-keeping began in 1977, making this year’s drop not too surprising and reflecting the shrinking beef herd.
For cattle prices, these numbers indicate more of the same. Because of the length of time it takes for a cow to gestate a calf and for that baby to mature into a cow or animal for slaughter, the tight supplies in the beef sector will not be solved overnight, in a month, or even in a year, but rather over the course of at least a few, if not several, years. Beef-on-dairy crossbred calves have been a solution to fill the pipelines, but because the dairy herd is just a fraction of the beef herd, these animals will not overwhelm supplies and depress prices. This report provided some insight into where the beef herd stands today, but as for dairy producers, the calf revenue stream will likely persist as a lucrative income source for at least the next few years.
