December 24, 2025
THE MARKETS
Finally cash trade occurred in the south at $229 — $1 lower than the last cash prices two weeks ago. A few dressed trades occurred in the north at $356 — steady and a few live trades at $229 — $1 higher. Trading is expected to be light for the balance of the week.
A brief survey of beef producers finds little optimism for 2026. Conditions surrounding the industry are negative both politically and economicly. Next year will likely continue small supplies and high prices but missing will be margins for beef producers and processors. Almost 87% of cattle last week graded choice or prime — a new all time record.
This week was the last full week of slaughter before two holiday trimmed weeks. This week of 587,000 head was down 9,000 from the previous week and 29,000 under last year. Missing from this week’s slaughter production was the profit margin that characterized the previous recent weeks. Increasing cattle costs marred returns.
MERRY CHRISTMAS
CATTLE FUTURES
Futures traded lower as box prices fell. Trading sessions will be shortened today, closed tomorrow then back to normal on Friday.
Benchmarking. On Tuesday of each week, USDA releases a weighted average price report for all cattle sold the previous week. The report summarizes the distributed price levels for each category of sale such as Negotiated/Formula/Forward Contracts. Beef producers are able to measure the marketing price for their cattle compared to the national averages.
The Comprehensive Fed Cattle Weekly Report offers the most current information on the current status of fed cattle being harvested. The report is published each Tuesday and includes the previous week’s change in carcass weights and quality grading. The latest report shows carcass weights at 952#, 2# lower than the prior week, and 34# heavier than last year. The combined steer and heifer weights can easily be influenced when the proportion of steers to heifers in the weekly slaughter changes. Quality grade was up .7% from the previous week at 86.9% — an all time record high.
The Weekly Steer and Heifer Grading Report is indicative of regional supplies of choice and prime cattle and often is determinative of regional differences is live price. The report is also reflective of the current status of fed cattle offerings in each area.
Forward Cattle Contracts: Forward contracts will always bear some relationship to the corresponding futures month closest to the delivery month for the cattle. Basis levels will move up and down as processors want to add to forward contracts or not. The driver in forward purchases of cattle will always be forward sales of beef. Packers will always be willing to take a price risk off the producer’s plate in return for an extra margin.
The volatility in futures prices has caused more interest from cattle owners in forward contracting. During the past two to three years, fewer cattle have been forward sold as most producers anticipate higher prices in the future months. Some owners now are willing to set the price for future deliveries with basis levels to the futures varying by region. The problem that will slow forward contracting is the heavy discount held by the deferred live cattle contracts.
Formula and Negotiated Grids. The Price and Distribution Report delineates the various selling methods and net results.
The Cattle Contracts Report details the percent of contracts by volume of cattle and by number of contracts for selling cattle. Formula selling that was once the largest marketing method and still is, but is losing ground to negotiated grids where the premiums and discounts are set but the base price is negotiated.
If beef demand should improve heading towards Christmas, the middle meats should provide support for the cutout. USDA Prime cuts are carving out a larger slice of the grocery offerings. Holidays provide an opportunity for many families to spurge on food purchases. Heavy carcasses also are changing the processing specifications for some cuts. Many of the rib cuts are now cutting off the lip to make the ribeye steaks smaller.
The Cutout. Box prices were sharply lower in small volumes. Retailers are balancing needs with buying interest waning before the holiday. Because of improved quality grade, more prime cuts will be on the shelf this holiday season.
Replacement markets
The feeder market has a forced feel to it. Supply shortages have created intense competition for a small supply of cattle and all buyers are wary. Hopes for a positive outcome of ownership of new purchases are not high and most operations want to stay in the market but know they are overpaying for cattle. There is little evidence of reaching or passing the low point in replacement numbers. There is a desperation feeling driving new purchases of owning inventory at any price.
Occupancy levels are falling in all regions but especially in Texas. The whispers are getting louder about a port by port opening of the Mexican border to be announced by year end. Certainly feeder futures have posted innumerable losses occasioned by the rumors and once the reality is experienced, very little market impact will be noted.
Empty pens are common spreading from south to north. Some operators would prefer to look at an empty pen to taking on the exposure by a new purchase of high priced cattle. Some bankers would agree. Those who do choose to place cattle on feed, must gamble with hard earned equity that future prices will rise well beyond the heavily discounted price witnessed on the futures board. Some consolidation of feeding capacity is expected in the new year.
The drought monitor continues to favor herd expansion. Some dryness has developed in the southern plains. Chances are good that the slow rebuilding of the nation’s cattle herd is now morphing into full throttle rebuilding and those forecasting recovery several years away will find it happening sooner rather than later.
Holiday
Holiday
Feeder Cattle Futures. Futures prices were lower.
The lack of liquidity in the feeder contract provides a perfect environment for prices to move too far in either direction. Poor liquidity leads to extreme volatility. Overdone directional price movements frequently require corrections and traders sense the vulnerability of the contract that needs to be cash settled but the contract index needs a redo.
Feeder Cattle Cash Index. The index is tracking the moves in cash prices.
Video and Internet Replacement Cattle Auctions. The movement from traditional private treaty sales to Internet auctions has been slow but steady. Producers have chosen this option as the primary marketing tool for most of the cattle offered in the replacement markets. The market that was once dominated by one firm has seen new competition from multiple trade platforms.
National Weekly Feeder Summary released on Friday of each week tracks the national prices by region for last week.
Grain Futures. Corn moved sideways. Corn basis levels in Guymon, Oklahoma are at +$.50 — basis the March contract.
SEARCHING FOR THE BASE PRICE
The recent weeks of price reporting have witnessed a major deterioration in Mandatory Price Reporting by USDA. Currently only two regions of five are reporting prices. Kansas sales were less than 1000 head this past week. That is essentially non-reporting in a state that slaughters 150,000 a week. Texas and Colorado shut down any reporting as government price reporters succumbed to packer designed rules to advantage non-reporting.
This environment left the entire price reporting apparatus in dysfunction. Some believe only the formula and committed suppliers were harmed, but a more careful examination of the marketplace shows serious harm and pricing disadvantage to most all producers. The base price is the starting point for formula cattle, but also is the starting point for many negotiated grids, “over the tops” and other cash based trades. Each processor is left with the tools to game the system and distort pricing.
USDA has reached out to the processors to ask what can be done. There is little to no evidence they have reached out to producers. There has been no proposed solution to a critically dire need. Meanwhile “on the fly” work arounds have occurred between beef plants and feedlots to patch a broken system. The work arounds leave everyone unhappy. USDA pretends to furnish more information than ever to producers by amalgamating all the data from slaughter weeks into reports. This mixes forward contracts with current cash, premiums and discounts across all regions, mismatching slaughter weeks for formula cattle (received one week late) with current cash results and more confusion.
Transparency and benchmarking were the mandates of the law passed by Congress. AI tools and database management provide a quick, simple and easy solution to reporting. The problem will not get better with time. Once the Tyson plant closes and Amarillo drops back the hours, the problem will worsen. No matter what type seller you are in the marketplace, you can not determine your effectiveness without data to support your decisions.
USDA CONTACT FOR CORRECTING MANADATORY PRICE REPORTING
mpr.lpgmn@usda.gov
This email address is used for comments for Livestock Mandatory Price Reporting (LMPR) and the Cattle Contract Library. You can also leave a voicemail at 202-720-1990 if needed. Make sure to have your establishment number available when reaching out. [mpr.ams.usda.gov]
CATTLE REPORT LIBRARY
Change is a necessity for any sustainable industry and sometimes necessary changes encounter obstacles in the form of stalwarts who refuse change. The Cattle Report has created a library page of opinions pieces published on these pages advocating fundamental and structure changes for the industry.
NOTE TO READERS
Sections of the newsletter are designed with hyperlinks to the appropriate source pages. The hyperlinks are in light blue within the report.
EXPLANATIONS OF BREAKEVEN/CLOSE OUT TABLES
Regional differences in grain and cattle basises create a difficulty in modeling a national composite for current close outs or a proforma forward look at a breakeven. Readers should consider your own area for adjustments to these models. Most calculations are basis relevant prices in Guymon, Oklahoma.
CURRENT BREAKEVEN PROJECTION
The Cattle Report introduces the FEEDER METER. The report estimates profit or loss for currently purchased feeder steers and projects a result 180 days out. The chart is interactive and updated every 15 minutes in real time based on changes in futures markets in grain and cattle. Corn basis information is based on current trade prices adjusted every two weeks. Feeder prices are based on the USDA index price for 800# steers and fed cattle sales are $2 cwt. premium the appropriate futures contract.
CURRENT CLOSE OUT
The Cattle Report estimates current profit or loss on cattle placed on feed 180 days ago. This report generated from industry averages attempts to simulate a typical close out based on the feeder index for 800# steers 180 days ago. The close out assumes grain was purchased at market each month. Selling prices and interest rates are based on prevailing benchmark quoted prices. This chart will change weekly.
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