January 21, 2026
MARKETS
Half of the country will be bracing for snow and frigid temperatures this week. Weather is likely to impair cattle performance and may in some instances present transportation problems. Show lists are down in Texas, flat in Nebraska, and up in Kansas. One small group of cattle sold in Iowa for $232. Market fundamentals are strong and will be sustained by frigid temperatures across the nation’s plains.
Packers accomplished some improvement in box prices last week and managed, with the aid of plummeting cattle futures, to buy cattle steady with the previous week. With the futures down hard, mostly steady to $1 higher prices occurred in all areas. Live trades were mostly at $233, with a few at $234 in Nebraska. Dressed prices were mostly at $365 — steady with last week.
The steady flow of sell orders in cattle futures last Friday made little sense to any but the many hedged cattle owners who took the opportunity to improve their basis levels. More sophisticated traders, who usually sense an irrational move in futures, are wary of entering a futures market that may be active with someone who has knowledge of a future political announcement. Front running is a dangerous factor in the marketplace and can undermine rational forces that usually correct market distortions.
Obviously heavier placement weights mean less days on feed, but except for dairy cross placements, yearlings placed into feedyards are getting heavier similar to fed out weights. No one wants to replace inventory with high priced replacements. Some of the heavy placements from summer months are reaching marketing weights and the current price level may fail to bail out those purchases and the future will only get worse. The next few months will market some high priced feeder cattle, but there will be fewer of them.
This past week’s slaughter of 562,000 head was up 9,000 from the previous week’s slaughter volume, but 39,000 under last year. The week also held on to the decline in the spread between choice and select grade now at $2. Grading of cattle above the choice grade topped all time records. The slaughter is likely to remain near the current range for the coming weeks as packers adjust to a plant closing and new adjusted slaughter rates in the remaining plants.
Futures prices firmed on Tuesday.
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 957#, 1# higher than the prior week, and 33# 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 .2% from the previous week at 87.1%.
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. Large discounts in the deferred month usually discourages forward contracting.
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 mixed. Slaughter levels in the mid 550s are finding support at the retail level. The choice/select spread remains narrow. Because of improved quality grade, more prime cuts will be on the shelf this year. Daily beef reports should include spreads between choice and prime as prime volumes are on a par with select for volume of sales.
One casualty of the beef marketing efforts has been the highest end products. The Wagu and branded “all natural” specialty items often seen on the meat counter, but always carrying a heafty price tag. These include the USDA Prime cuts and have become more prevalent as quality grade on all cattle continues to break new records. It is not unusual to see packages carrying a discount sticker. They must be sold like all perishables, but unlike most perishables, the consumer experience eating the discounted cuts is not diminished.
Replacement markets
The feeder market is remaining competitively priced as buyers struggle with limited numbers of cattle and find those offered are in strong hands and considered overpriced. Even the most inexperienced buyers of cattle are worried they are paying too much. Placement numbers recovered somewhat in December but will be trending lower most of this year. Hopes for a positive outcome from 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 a new desperation driving new purchases of owning inventory at any price.
The dairy segment of the beef industry is in a liquidation mode following drops in cheese, milk, and butter prices. More dairy cows can be expected in this year’s slaughter numbers. Helpful to many dairy operations are the prices of day old beef dairy cross calves that have become a popular feature in marketplace.
Feedyard occupancy levels refilled somewhat in December following Trump’s declaration to hammer beef prices and the brief decline in feeder cattle prices. There will always be a relationship between futures prices, cash prices and placements. Live cattle futures prices somewhat recovered after the Trump assualt enough to cause some operations to begin refilling empty pens. The whispers are getting louder about a port by port opening of the Mexican border to be announced soon, but news of more screwworm cases in Mexico continue.
The drought monitor is showing some areas of stress. Some dryness has developed in the southern plains. Moisture conditions and wild fire possibilities will play into the rebuilding of the nation’s cattle herd. If the plains is blessing with timely spring rains, the increase in cattle numbers will happen sooner rather than later.
Compared to last week: Feeder cattle and calves mostly steady to 4.00 lower on lesser quality and increased flesh. Demand moderate to good. Commodity futures closed today for the MLK Day holiday, following a sharply lower day for the cattle complex on Friday. Quality so far mostly average. Cattle in slightly thin to fleshy conditions. Winter type weather has finally arrived with highs only reaching the mid 30’s today. This will be warm by this weekend, when temps are expected to be in the single digits and teens. Supply included: 100% Feeder Cattle (59% Steers, 40% Heifers, 1% Bulls). Feeder cattle supply over 600 lbs was 58%
Compared to last week: Steer and heifer calves 10.00-20.00 lower. Demand moderate. Quality not as good as last week. Front-end cattle are only slightly lower but those are few and far between. Buyers are being very cautious ahead of a late-week winter storm, with weekend highs expected to only get into the teens. All cattle with the description Value-Added are part of the Oklahoma Quality Beef Network. Estimated
receipts for tomorrow is 6000. Supply included: 100% Feeder Cattle (49% Steers, 45% Heifers, 7% Bulls). Feeder cattle supply over 600 lbs was 37%
Feeder Cattle Futures. Futures prices firmed in early week trading.
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 moved modestly higher to open the week. The USDA stocks report raised ending stocks to 2.2 billion bushels from estimates of 1.9 billion bushels. USDA also add 1.3 million acres to the harvested acres for this year. The report was very bearish for corn prices. Corn basis levels in Guymon, Oklahoma are at +$.50 — basis the March contract.
DEALING WITH IRRATIONAL MARKETS
Packers last week decided to withhold bids until Friday posing volatility risks for them but being squeezed by live prices too high to get beef sales close to a breakeven. Friday opening hour of trading brought them good news – a crashing futures market that set the stage for them to buy next week’s slaughter needs at lower prices. The market fundamentals did not allow that to happen despite falling futures and the entire episode left most industry players marveling at the unexplained fall in futures prices.
There exist only two possibilities for the futures action. Either something in the news triggered the decline or alternatively someone is front running a market moving announcement expected in the coming week[s]. The only news story possibly influential to the cattle markets would be the announcement of more screwworm cases in Mexico. The impact on cattle markets would be almost impossible for any rational human to justify a bearish spin on the discovery. There is no health danger to beef eaters and little bearish news to the supply of replacement cattle that one might expect to create a future delay of the border opening.
This leaves the front running notion. Few would be surprised if Trump has something in his bag of tricks to damage the beef markets. Fewer still would be surprised if Trump shared his plan with some insiders who might act on the planned news event hoping to turn government policies into dollars and cents. Already some have questioned the reliability of some government reports that influence food prices or inflation.
This next week will reveal more information about market moving news. In the meantime, Ag Center, the publisher of the Cattle Report has discussed offering propositional betting on the site. This would allow interested parties to stake wagers on specific outcomes for cattle or grain markets. Gauging the interest of readers will be important to the development of this idea.
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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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