By Tom Polansek
August 7 (Reuters) -Nebraska cattle rancher Craig Uden bought 200 extra mother cows and their babies over a few weeks in May to expand his herd as dry weather gave way to rain that rejuvenated land used for grazing.
In South Dakota, Troy Hadrick kept 16 more young female cows, known as heifers, on his farm than he did last year to be used for breeding, rather than sending them to be slaughtered for beef.
More than 1,400 miles south in Texas, the biggest cattle-producing state, Fausto Salinas was also preserving heifers to increase his herd.
In major U.S. livestock regions, some ranchers have slowly begun taking the first steps to boost cattle production after the nation’s inventory shrank due to a years-long drought that dried up pasture land used for grazing and hiked feeding costs.
By the beginning of the year, the herd had dwindled to 86.7 million cattle, the smallest number for the time period since 1951, according to U.S. government data.
When grass failed to grow on pasture land that turned from green to brown and as feed grains became too expensive, ranchers began to ship off more cattle to be slaughtered. Some producers searched miles away for hay to nourish their remaining animals.
The drop in supply drove U.S. food companies to increasingly import beef from other countries, including Australia and Brazil.
Though in its early stages, the herd expansion is now a sign of hope for consumers shelling out for expensive steaks and for meatpackers losing money buying high-priced cattle to slaughter.
“Cattle availability should improve in coming years,” Tyson Foods CEO Donnie King said during an earnings call this week.
Farmers’ cautious plans to rebuild mark a turning point after a continuous downsizing of the herd for six years in a row pushed beef prices to record highs in 2025.
Cattle prices reached records too, slashing the profits of processors like Tyson and providing income for farmers who also grow grains and have struggled to turn a profit from selling crops.
Cattle production is the nation’s most important agricultural industry, according to the U.S. Department of Agriculture, which said the sector consistently accounts for the largest share of total cash receipts for farm commodities.
After delays due to persistent dryness, improved rains are motivating the expansion, along with expectations that cattle prices will remain lofty during the long rebuilding process, ranchers said.
In Nebraska, the second biggest cattle-producing state, the portion of the herd in areas suffering from drought dropped to 19% in late July from 79% two years earlier, according to the U.S. Drought Monitor.
Near Cozad, a city of 4,000 people where Uden works with his son-in-law, rains have not quit since starting around Mother’s Day in May, Uden said. Grass conditions look the best since 2011, he added.
The dramatic improvement comes as a record U.S. corn harvest is expected to boost available feed supplies.
“Everything has kind of fallen into place,” said Uden, 64. “The cattle will have plenty to eat this year.”
Ranches in South Texas also benefited from one of the greenest summers in years, a welcome reprieve after the punishing drought turned forage brown and dry and killed some cattle.
“Right now, we’re in the process of rebuilding,” said Salinas, a rancher in Rio Grande City, Texas, who sold cattle during the drought.
TIGHTER SUPPLIES
When ranchers retain heifers, beef production temporarily slows because the animals are not being sent to be slaughtered; it will also likely push meat prices even higher before they come down, agricultural economists said.
Consumers have shown resilience to the climbing cost of beef, but increased prices will test demand, they said.
It takes about two years before beef output rises after ranchers make initial moves to expand because that is how long it takes to raise full-grown cattle, ranchers said.
U.S. cattle and beef supplies are set to decline even further after President Donald Trump’s administration halted imports of Mexican livestock in July to keep out New World screwworm, a devastating pest.
U.S. beef imports from Brazil, a key supplier of meat used to make hamburgers, are also expected to fall after Trump imposed a 50% trade tariff on Wednesday.
MEATPACKERS LOSE BIG
Beef producers such as Tyson and Cargill have waited years for ranchers to begin rebuilding herds because companies must increasingly compete with one another to buy limited supplies.
Processors were losing about $300 on each head of cattle they slaughtered on Tuesday, according to livestock marketing advisory service HedgersEdge.com.
Farmers have worried a processor may shutter a beef plant due to hefty losses, though Cargill told Reuters it had no plans to do so.
“It’s not overwhelmingly glaring that, ‘Hey we’re starting to rebuild the cow herd,’ but I think there are quite a few signals,” said Jarrod Gillig, senior vice president of Cargill’s North American beef business.
For one, strong prices for heifers at a major video livestock sale in July signaled the animals will be retained on farms, Gillig said.
In rural feedlots, about 4.2 million heifers were being fattened for slaughter as of July 1, down 5% from 2024, according to USDA data. The decline likely reflects that ranchers are keeping at least a few more heifers on farms to reproduce, analysts said.
Tyson said a 16% drop in beef cow slaughtering from January to June was another early indicator of ranchers retaining heifers on their farms. The meatpacker reported cattle costs climbed by about $560 million in the quarter that ended on June 28, compared to a year earlier.
Herd rebuilding will begin in earnest next year, and the beef business will see benefits in 2028, King said.
DIFFICULT DECISION
Ranchers who retain heifers must make a difficult decision to forgo immediate profits from selling cattle for slaughter in a bet that prices will stay high. Many are cautious about passing up the opportunity because they remember when prices tanked following a rapid production increase in 2014.
High interest rates also discourage farmers from expanding operations.
Hadrick, 49, said he would have liked to hold back more than 16 cows at his farm in Faulkton, South Dakota, but he was spooked by a lack of moisture earlier this year. High cattle prices encouraged him to expand a bit now that his son has returned home from college and provides extra help.
“The market’s screaming for more cattle,” Hadrick said. “We’re dipping our toe in.”
(Reporting by Tom Polansek in Chicago. Additional reporting by Heather Schlitz in Rio Grande City, Texas; Editing by Aurora Ellis and Emily Schmall)
