December 27, 2025
MARKETS
Small sales volumes accompanied small processing volumes. Buyers were picky this past week and completed the buy for two weeks of holiday shortened slaughter volumes. Next week they will be purchasing for a full slaughter week. Prices moved up a dollar from Tuesday to Wednesday ending at $230 in pre-holiday trading. A few dressed trades occurred in the north at $356. Trading in the south has been mostly $229 although some trades are occurring unreported at “over the top” prices allowing packers to advantage the base price.
A brief survey of beef producers finds little optimism for 2026. Conditions surrounding the industry are negative both politically and economicly. Next year will likely continue small supplies and high prices but missing will be margins for many beef producers and processors.
Last week’s Christmas slaughter of 429,000 head was down 58,000 from the previous week and 4,000 under last year. The week also included another decline in the choice cutout that has been in a steady decline since November. The choice/select spread also narrowed to the smallest number of recent months at $7. Grading of cattle above the choice grade topped all time records. Seasonally the first quarter of each year is the narrowest choice/select spread of the year. Holiday shoppers found many more prime beef cuts on the meat counter this year.
Futures prices posted one dollar gains.
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 952#, 2# lower than the prior week, and 34# 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 .7% from the previous week at 86.9% — 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.
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 continued lower to close the week. Retailer interest in restocking is waning as the holidays wind down. 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 new desperation 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 soon. Certainly feeder futures have posted innumerable losses occasioned by the border rumors and once the reality is experienced, very little market impact will be noted. Many structural changes are occurring in Mexico as more ranchers opt to feed their own cattle in Mexico.
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.
Holiday
Holiday
Feeder Cattle Futures. Futures prices were modestly 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. 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 moved lower to close the week. Corn basis levels in Guymon, Oklahoma are at +$.50 — basis the March contract.
LEARNING TO LIVE WITH DONALD TRUMP
Beef producers are familiar with markets. What goes up will come down. Unforeseen factors will find their way into the marketplace and certain industry changes will have unintended consequences. Risks are inherent in the business and those seeking the comfort of steady reliable income should look elsewhere.
President Trump has broad and strong political support in American agriculture and that support includes most in the beef industry. Beef producers are attracted to a politician who speaks his mind, believes in individual responsibility, and has a “can do” attitude. They don’t like the government waste they see every day and don’t like government bureaucrats who worry more about helping the world than they do about correcting the internal problems present in everyday life in America.
They are discovering flaws in Trump’s leadership style that threaten the very economic foundation in which they believe. Rather than formulating sound economic policies, he operates “on the fly” — issuing posts on social media without thought or consideration to the impact. Impulsive posts sometimes are quickly retracted or morph into something entirely different. He firmly believes the Supreme Court is in his pocket and will support his legal overreaches and his challenges to our system of checks and balances is dangerous.
Living with Trump as President means living with uncertainty. We need a strong leader, but we also need a judicious leader who carefully considers the impact of his executive actions. We need a referee for fairness and a balance against executive actions made in haste that require more thoughtful consideration. This requires a more assertive Congress and Supreme Court — holding in check the impulsive actions of the President. This will allow the best instincts of our President to make positive changes to our country.
USDA CONTACT FOR CORRECTING MANADATORY PRICE REPORTING
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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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