November 6, 2025
THE MARKETS
This publication is as guilty as any of asserting reasons for market moves when none exist. Futures on Tuesday lost all of Monday’s gains, then moved limit down on Wednesday. Some say from Trump’s tweet he was not going to fund SNAP later recanted by the White House, more border opening rumors, and the Supreme Court arguments yesterday on the legality of tariff initiatives by the President. More speculative theories were that a large feeding company was forced by lenders to protect the inventory and forced to short the market with no buyers on hand. The only thing that was obvious to all participants, at the end of the day, is there were no buyers to go long cattle futures.
Packers took advantage of limit moves in futures to secure next week’s slaughter needs. Cattle traded at $232 in Texas and Kansas — $3-4 weaker. Northern cattle owners accepted $360 dressed and $230 live — steady with last week. A few cattle in Iowa traded for $228. Many of those northern sales are moving south where numbers are the shortest.
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.
This past week’s slaughter at 559,000 head was down 14,000 from the previous week and 56,000 under last year. The weekly slaughter sometimes seems to happen “on the fly” as packers read the tea leaves of retail demand and make fine tuning adjustments to the slaughter levels. This week’s slaughter was in line to equal last week before quickly slowing the volume at week’s end.
CATTLE FUTURES
Live cattle closed limit down following Tuesday’s rout. The problem is a simple one. With the administration openly targeting any vulnerability in the beef complex to drive down prices, there are no traders willing to go long the futures.
The largest feeding firms, some of which are owned by Wall Street investment firms, run fully hedged operations. The current crush pricing has caused a large change to their operations. The purchase of replacement cattle accompanied with long grain positions and short distant futures in live cattle are resulting in deep red ink. This is forcing choices of going naked and hoping for the best or locking in large losses on purchased cattle.
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 948#, par with the 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 up .5% from the previous week at 84.7% . This is one of the highest grading weeks of the 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.
If beef demand should improve heading towards the holidays, the middle meats should provide support for the cutout. Prime cuts are carving out a larger slice of the grocery offerings. Holidays provide an opportunity for many families to spurge on food purchases. Nothing creates more good will at Thanksgiving than finding a prime rib roast along side the turkey.
The Cutout. Box prices were mixed for the third day of trading. More emphasis will be focused on the middle meats as we move towards the holidays.
Replacement markets
Feeder futures have made a large adjustment downward in price. Many heavier replacement cattle have followed the futures down, but many of the lighter offerings have stubbornly refused to follow. Some light weight calves are reaching back towards record levels. On the fundamental side, auction market receipts are down as are country movement of cattle — leading to sharp reductions in placements. There is little evidence of reaching or passing the low point in replacement numbers.
Occupancy levels are falling in all regions but especially in Texas. The purchase of a 800# steer on today’s market given today’s feed cost would result in a $250 loss if the animals were hedged. Some operators would prefer to look at an empty pen. Some bankers would agree. Those who do choose to place cattle on feed, must gamble with equity on a rise in prices by next year when the cattle will sell.
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 over 800lbs 10.00 higher in a light test, under 800lbs 25.00 higher. Steer calves 20.00-30.00 higher. Feeder heifers and heifer calves 15.00-25.00 higher. Feeder quality plain to average. Calf quality average with a few fancy drafts. Buyers were aggressively bidding on calves. Corporate buyers were still cautious, today. CME futures opened lower but have closed dollars higher. Sunshine and mid 70s are forecasted for the rest of the week. Supply included: 100% Feeder Cattle (55% Steers, 37% Heifers, 8% Bulls). Feeder cattle supply over 600 lbs was 47%
Compared to last week: Steer and heifer calves 20.00-30.00 higher. Quality ranged from plain, thin condition cattle to attractive type cattle carrying full condition. Spreads were wider than usual as the sale began very strong, but after the board closed dollars lower, buyers started to pull back. Supply included: 100% Feeder Cattle (46% Steers, 40% Heifers, 14% Bulls). Feeder cattle supply over 600 lbs was 21%.
Feeder Cattle Futures. Futures fell moving quickly to limit down in all contracts.
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 were higher. Harvest is moving to the final stages as hot and dry weather are ideal for bring in the crop. Some disappointment has been evident in crop yields and this has supported strength in the corn market. Elevators are holding the basis flat. Corn basis levels in Guymon, Oklahoma are at +$.60 — basis the December contract.
MARKET PSYCHOLOGY
There has been a lot written recently about the change in market psychology. By this, most people mean beef producers now accept the trend line up in cattle prices has been reversed. Producers accept this as fact and are changing their behavior by more readily accepting lower prices. It is factual that people often react emotionally to market moves and those reactions sometimes lack logical analysis.
It is not true that these reactions impede the underlying fundamentals of the marketplace. Emotional responses often set the stage for reenforcing the underlying factors surrounding formation of a market price. The recent crash of cattle futures prices may have triggered some producers to accept sharply lower fed prices, but those lower prices encourage the processors to process more cattle because of enhanced margins. This in turn eats into an already short supply of fed cattle.
While the hedge fund trader sitting in an office in Darian, Connecticut may have liquidated a speculative long position in futures upon hearing President Trumps warning about beef prices, a Swiss commodity trader may see the $15 drop in cattle futures as a opportunistic entry point for a long position in the futures. Neither of these traders have ever seen a feedlot or a fed steer. They could be technical traders, or part of a macro-economic play, or a bot directed order flow.
The marketplace for cattle and beef is a big tent. The futures market fails to be extremely liquid due to the flawed construction of the contract, but it is an open marketplace available to anyone with the necessary margin to make a bet. The physical product is governed by supply/demand principles, and when all of the psychology and emotion are stripped out, the market will always return to the fundamentals.
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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