The end of January summarized the state of the industry in a matter of a few short days with the release of USDA’s inventory report. In my last column, I expected the overall cow herd to be down slightly, and it was where the report showed the national cow herd at a 75-year low. Beef cattle were down by nearly 300,000 head from the previous report, with states like Kansas and Missouri showing the largest decreases, while states like Nebraska, Oklahoma and the Dakotas showed an increase. Overall, there was a small decrease in the national cow herd, but there is a lot to take away from in the report.
For starters, the quick recap is that massive culling is slowing down and the financial incentive to keep a female and breed her has finally tipped. While this has been slowly happening and mostly isolated already, it will take some time for this to reach the production cycle on the national level. For the last several years as this market kept climbing, these reports seemed to kick the can down the road, but nobody knew just how long the road went. As a sector of the industry, it appears it is coming closer, but it’s not over yet. The 2025 calf crop was down 2% overall, and this trend is most likely to stay the course in the next two calf crops.
In a Rural Radio Network interview with industry analyst Don Close, he said, “Clearly when we went through October and November we had the comments from the administration. We had the uncertainties with tariff quotas, there was a time … we asked is this market is over with or not? If you look at the recovery and stability in the market that we’ve seen since that time, and you compound that with the breakdown of the cattle inventory report that was released … I think it gives us absolutely solid footing, resets the price correction, resets the clock and I think this market’s got room for another run to the top side.”
It wasn’t just the cattle inventory report, but the cattle on feed numbers released a week earlier that pushed a lot of the comments in this direction. The cash market surely felt the surge in several areas of the country, including a National Beef Wire report that said OKC West Livestock Market reset their state records with the five highest priced four-weight steers in Oklahoma with 24 steers weighing 406 pounds selling for $6.55/cwt ($2,659.30/head). The same site quoted six-weight steers throughout their reporting barns as averaging $435.12/lb. These quotes included Montana, Wyoming, South Dakota, Nebraska, Kansas, Missouri and Oklahoma.
This market is in the midst of another run, though not many expect to see growth by large percentages, but to see a consistent market take hold across the country as we near the plateau, many have been wondering where it is. We don’t know at the moment where it is, but most feel like it is closer today than it has been since the national herd started shrinking.
Ironically, as we start talking about the reasons why the herd is so small—drought, fires, economic pressures, etc.—the nation is looking at another wave of these same issues. Especially in the West, as mentioned in last week’s column, dry conditions might not allow producers to hold back females. Texas and several high-cow number states are also feeling the fear of a dry year that could create more instability in the marketplace. The next 120 days are going to be very interesting to see.
One thing to point out in the inventory report was the expected increase in dairy cow numbers. As mentioned in previous columns, producers have retained older pregnant cows and with the day-old market being so high, that heifer retention quickly jumped into production. Milk prices have felt the supply pressure, which is why many on the beef cattle side were so outraged when Western United Dairies went public with their buyout proposal to capture additional dollars for cull cows and feeder heifers.
While all this is going on and the cash market is taking a jump, here comes the news about New World screwworm being found in the U.S. After some quick research, it’s found that a horse being transported from Argentina was carrying larvae in an open wound and was found during routine inspection at an import station in Florida. The current system worked as it should, and the larvae never posed a risk to the U.S. The news should have read that the ports are working properly for the safety of the U.S. animal population without risk. This just feels like how the news cycle is going to be this year. Every time there feels to be some momentum building, there’s going to be something to keep it in check. As a producer, the nervousness we’re going to feel all year until that check clears the bank is going to be asking the question, “What will tomorrow bring?”
We have the information—it’s in the reports. The fundamentals are still in the favor of the cow-calf side, even though it appears retention is just now starting to happen. What we don’t know is what the other side of the pendulum holds. Nobody knows how many cows we have room for now with the number of retirements and dispersions that have happened in the last several years. By all means, the market still says the fundamentals are going to override corrections given enough time, but that doesn’t mean it’s going to be an easy year, so my advice is to plan accordingly. — LOGAN IPSEN
