APRIL 24, 2025
THE MARKETS
Trump seems to be backing off the hardline stance on tariffs and the market acknowledged it. One group of cattle in Kansas brought $213 or $3 higher than last week. Look for more trading to develop today.
Processors slaughtered 576,000 cattle this past week up 12,000 from the previous week, but down 42,000 from last year. This past week packers sold boxes at barely stable prices and were forced to pay higher prices for fed cattle — leaving the margins deep in negative territory. The fed cattle portion of the weekly slaughter continues to make a larger percentage of the total slaughter than prior years. Beef cow slaughter is near year ago levels with dairy cows slaughter smaller. The shortfall of the cow slaughter has kept packers pulling from the fed cattle population to put together weekly slaughter needs.
CATTLE FUTURES. Futures opened higher at mid week setting the stage for improvement in cash prices.
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 911# down 5# from prior week and 20# 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 down 1.4% at 84.90%. The current grading hovers 1% over last year. Last week was 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.
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.
Beef demand is coming mostly from the grind that represents almost half of all beef sold. Published reports show hamburger to be not only the most popular item on the meat counter but also the fastest growing. Winter weather pushes consumers to end meats and roasts and historically a spring warm up triggers demand for the middle meats and cook outs. The daily fluctuations of the primals represents seasonal changes and consumer preferences caused by pricing.
The Cutout. Box prices were were softer.
Replacement markets
Runaway prices this year have repeatedly demonstrated their ability to top last week’s prices with still higher prices. Despite fears from the tariffs and consumer hesitancy for high priced beef, somehow the limited pool of replacements are enjoying intense competition with incremental price increases quoted in $5-$10-$20 rises. Experienced operators fear this cannot continue forever and somewhere down the line there will come a reckoning with financial implications.
Summer grazing is upon us. Stocker operators looking to furnish calves for summer grass are finding short supplies. The available offerings are sky high in price taking much of the incentive to graze away unless the operator is willing to bet on larger price increases next fall. Enter two way cattle. These historically have been 500# and 600# cattle placed on grass to return to the feedlot weighing 800+. This year some operators are purchasing 700# animals for summer grazing promising to return them weighing 900# to the feedyard.
The drought monitor continues to favor herd expansion but the rains never fall evenly across all regions. Computer modeling of weather patterns are done by several services and as AI programs interpret the data, those models will compete for accuracy. Currently European weather models compete with our own models and sometimes those models differ. April will be critical towards starting summer grass pastures and spring crops in the plains.
Compared to last week: Feeders and calves all unevenly steady. Receipts lighter due to rain last weekend. Demand good. Quality average. Rain forecasted for later this week. Cattle futures traded in the red today. Supply included: 100% Feeder Cattle (49% Steers, 47% Heifers, 4% Bulls). Feeder cattle supply over 600 lbs was 65%.
Compared to last week: Feeder steers and heifers 7.00-12.00 higher with instances of up to 20.00 higher. Steer and heifer calves sold fully 20.00 higher from last week’s lighter test. Demand very good. Supply included: 100% Feeder Cattle (74% Steers, 24% Heifers, 2% Bulls, 0% Dairy Heifers). Feeder cattle supply over 600 lbs was 90%
Feeder Cattle Futures. Feeder futures were higher.
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.
National Weekly Feeder Summary released on Friday of each week tracks the national prices by region for last week.
Grain Futures. It is not unusual for corn futures to develop a two track pricing in the spring and summer. Old crop corn follows one track and new crop another. Rain patterns will influence the new crop prices while old crop pricing tends to follow government stock reports and farmer releases of grain from the bins. More farm storage makes it more difficult to ascertain on farm storage. Crop planting is in progress and reports of acreage and rainfall will begin to influence the prices of the new crop. Corn basis levels in Guymon, Oklahoma are at $.90 — basis the May contract.
ADJUSTING TO TARIFFS
Tariffs don’t occur in a vacuum. When new fees are applied, businesses will devote time and effort to figure out how to mitigate the fees and/or how to avoid them. Some of the attempts are questionable from a legal standpoint and some are innovative. Most are not readily apparent and many are never known.
While the businesses are attempting work arounds to reduce the impact of tariffs, consumers will also begin to look at their options. The designer hand bags from Europe or the knock offs from Vietnam will soon be replaced by American purses and handbags. Sometimes the alternatives made in this country will be just as good and competitively priced. Other times consumers will sacrifice some quality but make do.
Tariffs are intended to create pain and pain creates change. China is the giant in the room and only 32% of their goods are bought by the Chinese vs. 76% percent in the United States. Losing a large portion of those sales will throw the Chinese economy into a tailspin. It will not be easy to relocate and target new markets and this will be a constant incentive to reach an accommodation with the U.S..
Returning manufacturing to our country is getting a lot of lip service now, and may actually result in more industry and jobs, but many businesses will wait to see how all the tariff bluster plays out. In the meantime, beef producers hope new pathways for our beef exports will develop. Vietnam and Hong Kong have always been gateways to China for many of our beef exports. If Canada ships more beef to China then they may replace those exports with imports of beef from the U.S.. Hope springs eternal.
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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