WASHINGTON, D. C. – U.S. cattle herds are showing signs of stabilization, with total cattle inventory increasing slightly for the first time since 2018, but the beef cow herd falling to 28.5 million head, a record low for the July report, indicates herd rebuilding remains limited.

That’s according to American Farm Bureau Federation (AFBF) Economist Bernt Nelson’s July 27 analysis of the July 1 USDA Cattle Inventory Report. According to the report, the inventory of all cattle and calves in the United States totaled 94.2 million head July 1, up 200,000 head, or less than 1 percent, from 94 million head July 1, 2025, marking the first increase in the July cattle inventory in eight years.

Despite the slight increase in total inventory, Nelson said indicators of herd expansion remain mixed: “All cows and heifers that have calved were estimated at 38.1 million head, unchanged from a year ago.

“Within that total, beef cows were estimated at 28.5 million head, down 200,000 head, or 1 percent, from 2025, and the smallest July inventory on record (the data goes back to 1973),” he added. “In contrast, milk cows were estimated at 9.65 million head, up 200,000 head, or 2 percent, from last year.”

He said replacement heifer numbers improved, but the calf crop remains historically small: “Beef replacement heifers increased 3 percent, suggesting farmers and ranchers are beginning to retain females for breeding. However, the 2026 calf crop is projected at a record-low 32.5 million head, marking the ninth consecutive annual decline and constraining future herd growth.”

Grant Dewell, DVM, Iowa State University beef extension veterinarian, who also holds a master’s degree in agricultural economics, told Farm World the one bright spot in the report was this 3 percent increase in replacement heifers from last year.

“That is not adequate to indicate that we are expanding the cattle herd, but at least it is in a positive direction, and there is potential that we have finally reached the bottom and are ready to turn around. If that is the case, I would not expect to see a rapid increase, but more likely a longer drawn-out expansion phase.”

Nelson said one of the most closely watched measures in the report is the inventory of beef replacement heifers weighing more than 500 pounds, which was estimated at 3.8 million head, up 100,000 head, or 3 percent, from 2025.

“This increase represents the first meaningful sign of heifer retention and potential herd rebuilding in nearly a decade,” he said. “Meanwhile, other heifers totaled 7.3 million head, down 100,000 head, or 1 percent, from last year. These animals remain a potential source of future breeding stock.”

Dewell said the other major number was that the 2026 calf crop is expected to be down 2 percent from 2025, so inventory of cattle available to be on feed for 2027 is going to be lower: “The proposed opening of the port of entry in Douglas, Ariz., may offset this some, but capacity at that area is limited, and will not be able to replace the 1.2 million head that traditionally have been imported from Mexico.

“Traditionally, the Douglas port had less than 200,000 cattle that pass through, and with the increased screening time, import numbers will remain well below that. If there are no problems, there are plans to open ports in New Mexico as well, but that plan is contingent on a successful result in Douglas. Regardless, there is not enough capacity to replace the lower 2026 calf crop, but this may help feeders slightly with supply.”

He said the report estimated the 2026 calf crop at 32.5 million head, down 2 percent from 2025, and the smallest calf crop on record, remains a major constraint on future herd growth: “These calves represent the pool of animals available either for breeding, or for placement into feedlots in 2027 and 2028. As long as calf numbers continue to decline, producers face limitations in expanding the herd, regardless of retention decisions.”

Andrew P. Griffith, University of Tennessee professor of agricultural and resource economics, told Farm World the only thing that caught him off guard in the report was the calf crop being 495,600 head smaller this year, compared to last year with the all cows and heifers that calved not changing: “That is essentially one week worth of slaughter, but I have no explanation for this reduction.”

Nelson said while the reopening of the border to Mexican cattle imports Aug. 24 will gradually increase feeder cattle availability, supplies are still expected to remain historically tight: “Reduced feeder cattle numbers ultimately imply limited future fed cattle supplies, which should provide some support to cattle prices.”

As for the remainder of 2026, Dewell said prices for calves will be slightly higher this fall, but there is not much room for prices to move higher: “The cattle inventory numbers show that cow slaughter decreased and replacement heifer retention had a slight increase, giving us the expectation that we have finally hit bottom, and will potentially begin rebuilding the cow herd.

“However, although much of Iowa received adequate rain this summer to keep pastures in good shape, the situation in the West is showing an increase in drought conditions, especially with the high temperatures experienced the last few weeks,” he added.

Although El Nino should increase precipitation in some of these areas later this year, he said that will not help current pasture conditions: “So, I would be watching to see what happens to the cow herd in the West. Will we see an increase in cow slaughter in the last quarter, or is there enough forage supplies elsewhere to prevent another uptick in cow slaughter?”

Griffith said he thinks the rest of the year is going to be ruled by volatility in prices: “Heifer retention will pick up in regions with adequate moisture, which means fewer head entering feedlots, but the breeding herd will be growing. This technically should support prices. I do not think we will see much change in prices other than the volatility.”