July 9, 2025
THE MARKETS
Smaller show lists and rising box prices followed a light slaughter and packer inventory last week. The cutout that was expected to work lower following the holiday but instead is showing signs of strength. This indicated good clearance at the meat counters and retailers are wanting to restock. Asking prices are higher with only small isolated sales at $225 in the south and $235 in the north. Bids have moved to $227 in Kansas.
Packers finished last week paying fully steady prices with the previous week. Cattle in the south sold from $224-$225 and live sales in the north were $230-$234 — mostly $230-$232 steady with the previous week. Dressed trades were also steady at $368-$372 and mostly $368-$370.
June was characterized by rising box prices and falling live prices resulting in major changes to processing margins. The adjustments to processing margins has corrected close to $300/head leaving some plants now with margins in the profit column. The only missing ingredient to margin enhancement is increased slaughter volumes set to occur this week and the following weeks of summer. Last week’s slaughter was 474,000 head down 86,000 from the previous week and 47,000 under the holiday week last year.
CATTLE FUTURES. Futures closed sharply higher for two straight days. Traders are anticipating higher fed prices and the spot August is selling at a large discount to cash.
The discount in the deferred contracts is pricing in a plant closure. No one knows what plant will close, or the size of the plant, or when it will close. When a plant does close, it will allow packers to reduce the red ink that has been spilling most of this year. Live cattle operators will lose some of the benefit of too much processing capacity and the losses at the plants that subsidized gains in margin at the feedlot level.
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 907# down 4# from prior week and 24# 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 flat at 83.5% from the previous week. The current grading hovers 1% over last year after recently reaching an all time high this year.
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. The box prices were higher to begin the week. Most analysts are calling for weaker box prices following the holiday when larger slaughter volumes resume. One factor that will play into beef demand is the weakness in the dollar. The dollar has reached multi-year lows making our high priced beef cheaper as trade partners exchange their currency for our dollars to pay for the beef.
Replacement markets
The stubbornness of the markets to observe caution at record breaking prices, has been the hallmark of recent market reports. The elevated risk profile of current purchases presents a challenge not seen in recent history. Faith that somehow the market will bail out breakevens topping $220 seem unrealistic. This projection assumes the beef processors will continue to compete for cattle with some losing as much as $300/head. The pool of replacement cattle continues to dwindle but the show must go on.
The cost of a dead calf is weighing on the market this summer. Death loss calculations are always a feature of evaluation for any purchase of cattle. A surprise in the death loss category has ruined many purchases. The blame game starts and friction between buyers and sellers often result in discontinued relationships. Sky high prices on all purchases sends a warning to all operators to take special care in evaluating the health risks.
Modeling the purchase of light cattle for a grazing program has taken a new twist. Most operations, whether leased or owned, assume a grazing fee per month or per pound gained. Putting the numbers together for a grazing profile returns losses even if the grazing is for free. How many people would choose to graze if someone gave you the pasture for free and you still lose? This means in a year of abundant forage some pastures will remain empty and others will fill with breeding stock.
The drought monitor continues to favor herd expansion. Only the desert southwest remains in drought. April/May/June rains have been generous across the plains. Following the cool rainy weather will be summer heat and wind. 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.
Closed
Compared to last week: Steer calves 10.00-15.00 higher. Heifer calves 5.00-10.00 higher. All classes of calves sold up to 20.00 plus higher, conservatively. Buyers were not very selective for kind, condition, or days weaned. Supply included: 100% Feeder Cattle (58% Steers, 32% Heifers, 10% Bulls). Feeder cattle supply over 600 lbs was 18%
Feeder Cattle Futures. Feeder futures are sharply higher with cheaper grain and improving cash prices.
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. Corn moved downward as crop conditions improve. The growing season has progressed without threats to this year’s crop and as time moves forward, the probability of bringing in a record crop of increased acres combined with improving yields is more likely. Corn basis levels in Guymon, Oklahoma are at $.90 — basis the September contract.
WHAT EVER HAPPENED TO FAKE BURGERS?
It is no secret that hamburgers are the center of the plate choice of the 4th of July but because of the recent rise in beef prices, they are more frequently becoming the number one choice for beef lovers. More of the beef cuts are targeted for the grind and more beef fat blends are offered on the meat counter as affordable options.
Flash back to 2019 when companies like Beyond Meat and Impossible Foods gained massive attention with products that attempted to closely mimicked the taste and texture of real beef. Partnerships with fast food giants like Burger King and Starbucks helped bring these products to the mainstream. The IPO of Beyond Meat in 2019 was one of the most successful of the decade.
After peaking in popularity, sales began to decline. By 2023, dollar sales of plant-based meat alternatives were down 19%. Consumer skepticism about ingredients and processing levels accompanied failure on the palatability and taste side. Critics cites high cost and heath issues with processed meats and sales moved into a steep decline. Beyond Meat reported a net loss of $44.9 million in Q4 2024, and its stock price plummeted from $239 in 2019 to just over $3 in 2025.
Beef will always have competitive challenges and lab work to create beef products using cultured tissue from stem cells is work in progress. Meanwhile the largest challenge for the beef industry is costs and making beef affordable. There is only one pathway for controlling cost and that is building a larger breeding herd – something that is also work in progress.
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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