The US cattle industry has been characterized by cycles of inventory and prices since the modern ranching industry developed in the late 1800s.
Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel said in a letter that there have been twelve cyclical inventory peaks in the last 129 years, with the first in 1890 and most recently in 2019. Cycles have been persistent regardless of whether the inventory has been trending higher or lower.
WHEN WILL REBUILDING BEGIN?
From the current inventory low (maybe, depending on drought), the most important question in the industry is when herd rebuilding will begin, Peel said. Increased heifer retention and reduced cow culling are needed to stabilize the inventory and begin expansion.
Beef cow culling decreased sharply after 2022, from a peak of 13.2% to 8.4% in 2025, he said. Beef cow slaughter is down again in 2026 and currently indicates a beef cow culling rate of 7.1% for the year, which would be a record low culling level.
The high calf prices that historically trigger heifer retention have been in place since 2023, Peel pointed out. More heifer retention means heifer slaughter must decline, and heifer slaughter has declined in total numbers since 2022.
However, it has declined little relative to total fed cattle slaughter, he said. In other words, heifer slaughter is down simply because there are fewer cattle, but it has not declined enough to indicate substantial heifer retention. The beef replacement heifer inventory was up a scant 0.9% year over year on Jan. 1, enough to suggest only the beginning of heifer retention.
FEMALE KILL MUST DECLINE
Ultimately, the best indicator of herd rebuilding is the combination of heifer and cow slaughter into total female slaughter, and a 12-month moving average of total female slaughter as a percentage of total cattle slaughter shows this.
The female slaughter percentage peaked most recently in 2023 at 51.8% (the highest level since 1985) and decreased to the current level of 48.8%, Peel said. Female cattle slaughter remains higher than the average.
Most of the decrease observed thus far in the female slaughter percentage is because of decreased beef cow slaughter, Peel said. Further decreases will depend on increased heifer retention (i.e. reduced heifer slaughter).
A commonly recognized threshold for herd expansion is when the female slaughter percentage drops below 47%, he said. The female slaughter percentage in the last four cattle cycles and the slaughter percentage that corresponded to herd rebuilding dropped below 47% from October 1979 to November 1980 (46.0% low); February 1992 to January 1996 (45.4% low); July 2005 to September 2007 (45.3% low), and July 2014 to August 2018 (43.3% low).
On average, the female slaughter percentage remained below the 47% threshold for 35 months, ranging from 14 months to 49 months (in the most recent expansion), Peel said.
WELL ABOVE EXPANSION MARK
The beef cattle industry is well above the threshold at this time, he said. The decreases in the female slaughter percentage thus far are only the signs of the beginnings of heifer retention.
However, history suggests it might take another 6 to 10 months for the female slaughter percentage to drop from the current level of 48.8% to the 47% threshold and then remain there for 14 to as much as 49 months depending on the amount of herd expansion.
The initial stages of this process mean that cattle slaughter and beef production will continue to decline and that the highest cattle prices of this cycle are still ahead, Peel said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $256.54 per cwt to $257.34, compared with last week’s range of $256.39 to $260.37 per cwt. FOB dressed steers and heifers went for $403.44 per cwt to $405.07, compared with $403.23 to $408.57.
The USDA choice cutout Tuesday was up $4.53 per cwt at $399.58 while select was up $0.44 at $376.85. The choice/select spread widened to $22.73, from $18.64 with 82 loads of fabricated product and 14 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef as $454.84 per cwt, and 50% beef was $187.74.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.23 to $1.43 a bushel over the Jul corn contract, which settled at $4.13 3/4 a bushel, down $0.01 3/4.
No live cattle contracts were tendered for delivery Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $364.00 per cwt, up $1.33. This compares with Tuesday’s Aug contract settlement of $366.87, up $5.32.