Adds details and analyst comments in paragraphs 5-10

By Tom Polansek

CHICAGO, Jan 31 (Reuters) - The size of the U.S. cattle herd has dropped to its lowest level since 1951, the U.S. Department of Agriculture said on Friday, fueling expectations that high beef prices will rise further.

Farmers have slashed their herds by sending more animals to slaughter, instead of keeping them to reproduce, following a years-long drought that reduced grazing lands and raised prices for livestock feed.

The decline has pushed up prices for steaks and hamburger meat for consumers who have struggled with high inflation since the COVID-19 pandemic.

The U.S. had 86.7 million cattle and calves as of Jan. 1, down 0.6% from a year earlier, USDA data showed. There were 27.9 million beef cows, down 0.5% from a year ago and 12% from 2019.

Meat companies such as Tyson Foods TSN.N and Cargill are watching for signs that farmers are starting to rebuild their herds as processors are paying record sums for cattle due to tight supplies. It takes roughly two years to raise a new cow to be ready for slaughter.

"The expansion signals we've been looking for are still on hold," said Rich Nelson, chief strategist for commodity brokerage Allendale.

Tyson is set to report quarterly earnings on Monday.

President Donald Trump's threats to impose tariffs on goods from Mexico and Canada could further increase beef prices as the U.S. imports cattle from both neighbors, analysts said.

The U.S. has already temporarily blocked Mexican cattle since late November due to a pest in Mexico.

"We're still set for a continued decline in beef production, at a minimum, through 2026," Nelson said. "We would still continue to expect to see further higher prices, certainly of retail beef."

(Reporting by Tom Polansek; Editing by Leslie Adler and Aurora Ellis)

((Thomas.Polansek@thomsonreuters.com))