December 18, 2025
THE MARKETS
Packers wanted to take full advantage of softer futures to weaken cash prices. The results were influenced by muddy pen conditions in Nebraska that caused some sellers to accept bids at $228 or $2 lower but dressed prices actually rose by $2 to $357 in the north. Packers targeted the heaviest muddy cattle to find a soft spot. Buyers entered the week with a larger than usual inventory and purchases for next week will not require a lot of additional cattle giving them the confidence to wait out sellers.
USDA still has not submitted any plans to correct the lapse in mandatory market reporting. Major gaps in reporting failed to trigger any responses and producers are scrambling to work though base price issues on the fly. The finger pointing and excuses generated would easily fill a humor magazine.
The ramped up slaughter of last week followed through with another relatively large slaughter this week of 596,000 head was down 4,000 from the previous week and only 14,000 under last year. Missing from this week’s slaughter production was the profit margins that characterized the past two weeks. Increasing cattle costs and declining box prices took out the remaining profit from plant margins. This will be reflected in next week’s slaughter volumes that are expected to be pared back.
PRE-RELEASE COF
ESTIMATES
CATTLE ON FEED December 98.3 97.3-99.0
PLACED DURING November 92.4 84.4-96.0
MARKETED DURING November 88.4 87.5-89.0
CATTLE FUTURES
Futures traded lower but were recovering by the close as cattle owners pass $228 bids. Shorts in the futures will be wary of a dangerously bullish cattle on feed tomorrow.
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 954#, 3# lower than the prior week, and 37# 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 1.4% from the previous week at 86.2% .
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 lower as retailers back away from the market and the choice/select spread narrows with national grading of choice and prime reaching record levels. Retailers seem satisfied with their current inventory levels. 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.
Compared to last week: Feeder steers 4.00-8.00 higher. Feeder heifers steady to 3.00 higher. Demand moderate to good for feeder cattle. Futures spiked at the end of the day, closing all in the green. Steer calves 5.00-10.00 lower. Heifer calves 10.00-20.00 lower. Demand moderate at best for calves. Cold temps today and the lack of rain in the next 10 days has limited that demand for calves. Quality mostly average, end attractive. Calf quality not as attractive as last week. Live cattle futures rebounded some with front 3 months trading just in the green. Feeder cattle futures continue slightly lower. Earlier rains provided enough moisture and wheat currently is looking pretty good, however the spicket has turned dry and more rain is needed. Supply included: 100% Feeder Cattle (56% Steers, 40% Heifers, 4% Bulls).
Feeder cattle supply over 600 lbs was 53%
Compared to last week: Steer and heifer calves over 500lbs steady to 5.00 higher, under 500lbs unevenly steady. Demand good. Buyers remained generally in line with last week’s sharply higher market, though they were more selective this week. Front-end cattle brought as much or more than last week, with buyers being aggressive on the limited supply of top-quality cattle. The market held together very well,
with several top-end prices established late in the day. As one buyer filled orders and stepped away, another buyer quickly took his place, keeping competition active through the end of the sale. Supply included: 100% Feeder Cattle (49% Steers, 43% Heifers, 8% Bulls). Feeder cattle supply over 600 lbs was 28%
Feeder Cattle Futures. Futures prices were soft.
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 prices posted mid week gains. Corn basis levels in Guymon, Oklahoma are at +$.50 — basis the March contract.
THE ADVENT OF THE DAIRY BEEF CROSS
The movement to dairy beef cross calves has been the single most important structural change to the composition of the national beef production model in the past 50 years. Traditionally, surplus calves from dairy operations were purebred Holsteins or Jerseys, which entered the beef supply chain. These straight dairy cattle had lower muscling and carcass yield and higher feed conversion costs leading to discounts in the fed cattle market due to carcass quality and yield grade issues.
The advent of artificial insemination of dairy cows with angus semen allowed dairy producers to begin breeding dairy cows to beef bulls—primarily Angus—creating dairy-beef cross calves. The use of sexed semen for replacement heifers and beef semen for the rest specifically accomplished two goals – high quality replacements and high valued dairy calves.
Angus semen was chosen for high marbling potential, market preference for “Angus beef” and improved muscling and carcass traits. The angus sires provided improved feedlot performance with the highest improvement with Holstein cows. The angus cross also benefited the poorer performing Jersey calves. Prices for day old calves moved from $100/head five years ago to a recent high of $1500/head with Jersey calves selling $200-$300 back. Popularity has risen among feeding customers to the point most prices have pushed breakevens above beef breed options.
The popularity of these dairy crosses has led to the development of calf ranches charged with the weaning and growing of the day-old calves to a marketable weight of 400-700 pounds, when they are sold to feedlots for finishing. The supply chain is not without its own set of challenges. Managing the health of day-old calves can be difficult as can the proper representations of genetics. The dairy cross cattle have found wide acceptance among the processors who value the reliable grading that often has 80%+ choice and prime carcasses.
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
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NOTE TO READERS
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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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