The latest USDA cattle inventory report delivered another clear signal that the U.S. beef herd has yet to turn the corner, and Texas remains central to the story, Texas A&M AgriLife Extension Service experts said.
Nationally, the number of beef cows dropped just over 1%, a sharper decline than many market analysts expected, said David Anderson, AgriLife Extension economist in the Texas A&M Department of Agricultural Economics.
In Texas, the nation’s largest beef‑producing state, cow numbers dipped by about 30,000 head, but producers held back 50,000 more heifers — an 8% increase in replacements that could signal the early stages of a slow rebuild, Anderson said.
He said strong calf prices and historically tight cattle supplies continue to shape producer decisions about growing their herds.
“That suggests we’re bottoming out — holding a few more replacements for future growth,” Anderson said. “But there’s nothing here that suggests rapid growth.”
A slower rebuild and tighter cattle supplies will continue to ripple from cow-calf operations to feedlots and packers, all the way to grocery stores, Anderson said.
Beef herd numbers signal slow rebuild
The rebuild process appears far more measured than past post-drought recoveries, said Jason Cleere, AgriLife Extension beef cattle specialist in the Texas A&M Department of Animal Science. Heifer retention ratios are trending upward across many regions of the state, yet high prices are causing some ranchers to weigh short‑term returns against long‑term herd growth.
Bred‑heifer values reaching $4,000 to $5,000 have created an incentive for producers to sell rather than hold on to calves, he said.
“There’s pressure to just sell them and take advantage of the market and then worry about rebuilding next year,” he said. “Many producers also remember the last rebuild — how fast it went and how fast prices plummeted afterward. They’re just a touch more cautious this time around.”
Texas’ long‑term cattle capacity has also been thinned by rapid urban expansion, land fragmentation, and the conversion of quality pasture into solar and other non‑agricultural uses. Those losses, Cleere said, translate directly into fewer cows in the statewide and national herd.
He said emerging drought around the state could also influence cattle producer decisions related to their herds.
Historically high prices could go higher
Anderson said the January inventory report is typically a strong indicator for how the year will shape up. Cattle physiology is already shaping the coming years. Most heifers are ready to breed by 15 months, and calves gestate for more than nine months. Calves reach finishing weight in 18-20 months.
Anderson and Cleere expect calf prices could go even higher in 2026 and 2027 due to tightened supplies. Recently, 500- to 600-pound steers were selling for $450 per cwt on average in Texas, compared with $326 per hundredweight at the same time last year.
Margins should remain strong for cow-calf producers, potentially even better than last year, supported by lower feed costs and sustained demand, Anderson said. But the year’s outlook for Texas will hinge heavily on how the drought evolves.
“You don’t see a lot of market reaction to the January report, but it’s one that tends to place an anchor for where things are, and that has a longer-term effect on prices,” Anderson said.