Last Friday, the cattle complex was in utter turmoil waiting for the highly anticipated Cattle Inventory report. As you know, there are numerous reports we as cattlemen, analysts and traders all monitor to stay abreast with what's developing in the cattle sector. But the Big Daddy of them all is the Bi-Annual Cattle Inventory report released in January.

The reason this report is such a big hitter is because it sets the tone for the market for the rest of the year. Sure, the cattle complex can endure challenges and unforeseen hurdles even when the report is bullish. But it's the best account of what's happening with the market's core -- the U.S. beef cowherd.

If you haven't gotten a chance to read DTN's initial Cattle Inventory report comments yet, you can access them here: https://www.dtnpf.com/….

But I'd like to further discuss what else the report unveiled and what it could mean for producers in 2026.

Regarding the U.S. beef cowherd, the report was crystal clear -- it contracted for the seventh consecutive year in a row and now sits at a mere 27.6 million head, the lowest inventory since 1951. To be even more specific, here is a breakdown of what the top 10 states with the most beef cows reported compared to a year ago: Texas down 1%; Oklahoma steady; Missouri down 3%; Nebraska down 1%; South Dakota steady; Kansas down 7%; Montana down 2%; Kentucky down 1%; Florida up 1%; and North Dakota up 2%.

The reason this report is extremely bullish is because most of the industry believed there was going to be a slight increase in the total number of beef cows in the U.S. But Friday's report doubled down and didn't show steady beef cow numbers compared to a year ago -- it showed fewer than a year ago.

Now, one may be quick to question, "Well, ShayLe, what about the uptick in beef replacement heifers? Shouldn't that counteract the decrease in the beef cow numbers to where the report is merely neutral or somewhat bearish?" I'd answer by simply pointing to the numbers. The beef cow replacements totaled 4,714,200 head, up 1% compared to a year ago. But simple math tells us a 1% increase in beef replacement heifers means an additional 41,700 head through the entire nation. That's not big enough to signify any meaningful expansion.

Friday's report was entirely bullish. And producers should expect another rallying year where the story remains mostly the same: Limited supplies amid robust demand will likely push prices even higher. That's not to say risk and volatility won't be factors embedded in the marketplace -- they undoubtedly will be. But at the market's core, supplies are still thin.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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Hear DTN Lead Analyst Rhett Montgomery and Ag Meteorologist John Baranick at the National Farm Machinery Show, Feb. 11-13, in Louisville, Kentucky. Their daily Weather and Markets Outlook sessions are at 10 a.m. EST, in Room B102, South Wing of the Kentucky Exposition Center. Note, this is a different room than previous years. You'll also learn about new digital products DTN is working on. Look forward to seeing you in Louisville!

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