October 2, 2025
THE MARKETS
Bids of $360 dressed and $230 live managed to purchase some cattle in Nebraska and Iowa, leaving the bulk of this week’s needs remaining. Show lists in both Nebraska and Texas are down sharply. Kansas is up modestly. Cattle are moving out of Nebraska to other regions leaving cattle owners in a stronger position this week.
The government shutdown is now a reality and there is little to indicate when a compromise among those in Congress will reconcile. Beef plants will continue to operate with government inspection but both gathering and reporting of market conditions may be erratic and incomplete.
President Trump’s meeting with President Xi later this month will highlight trade issues with China with special emphasis on agricultural trade. Trump will be working to provide the nation’s soybean farmers access to what was once their largest market for soybeans. Reopening outlets for beef also will discussed as China’s growing middle class has developed a taste for beef as an alternative to pork.
This past week’s slaughter at 555,000 head was up 3,000 from the previous week and 62,000 under last year. Slaughter volumes are expected to remain at this level hoping that fall demand for beef will improve. Packers lost ground and processing margins moved into the red as box prices continue to decline.
CATTLE FUTURES
Futures were mixed after firmness most of the day. Light trading in the north at lower prices weakened futures prices. October live cattle are now officially in a delivery month.
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 939# 9# over the prior week and 22# 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 .6 from the previous week at 83.6% .
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. The increases in beef prices force the retail outlets to change marketing schemes and the best option is the grind allowing all consumers to maintain beef in the diet.
Some general comparisons of protein prices at the meat counter without adjustments for bone, as of mid September are:
Beef…….. $9
Pork……..$5
Chicken..$2.50
The Cutout. Box prices were lower. Processor margins are threatened as beef cuts move lower faster than live prices of cattle. The box losses of this last week were larger than the $2-5 drop in live cattle prices. Packers will work to carefully balance beef offerings to prevent further declines and the only way to manage that risk is monitor the slaughter volumes until they can stabilize the retail demand.
Replacement markets
As September turns to October the fall runs of cattle moves into full swing. This year’s full swing is tempered by reduced numbers of cattle and auction receipts seem to be falling well under last year. Winter grazing prospects are good and many farmers are drilling wheat into well watered soil for a change. Smaller receipts translates into less cattle available for winter grazing. Not all farmers are anxious to graze their own cattle this year and many are soliciting cattle for grazing.
Throughout the industry the feeling that replacement prices have reached a level presenting a imminent danger to operating margins. Many operations are paring back and dropping out. Feedlot occupancy is in decline and some will close before reaching the low point of available replacement supplies. This is the first week when declining futures also were accompanied with declining replacement prices and some prices fell materially.
As summer turns to fall, buying protocols change for many operations. The desirability of purchasing high risk sale barn cattle requires unusually large discounts. Health risks for newly weaned calves, some that have never had any protective shots, shoots upwards. Death loss rates for newly arrived calves moves sharply higher. There are many contributing factors but included are variable temperatures with the spread between daily high temperatures and daily lows reaches the highest spread of the year and those daily changes produce high stress in newly weaned calves.
The drought monitor continues to favor herd expansion. The pressures to move cattle off summer grasses because of dry periods has not been a feature of this year’s grazing season. Timely summer rains have kept grass and crop conditions favorable and they will remain so into fall and winter. 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 and heifers steady to 3.00 lower in a very light test. Steer and heifer calves 5.00-10.00 lower on lesser quality. Demand moderate. Cattle futures trading on both sides but closed all in the red. Quality plain to average. Wheat planting continues across the state. Central Oklahoma very much in need of a rain, while North Western and Eastern Oklahoma seeing some moisture. Temperatures remain warm for the first part of fall. Supply included: 100% Feeder Cattle (52% Steers, 42% Heifers, 6% Bulls). Feeder cattle supply over 600 lbs was 56%
Compared to last week: Steers 10.00-15.00 lower. Heifers 10.00-20.00 lower. Quality mostly plain. Calf demand has eased with the arrival of October, as concerns with overall health weigh on the market. CME Cattle futures traded higher today. Supply included: 100% Feeder Cattle (38% Steers, 48% Heifers, 14% Bulls). Feeder cattle supply over 600 lbs was 25%
Feeder Cattle Futures. Feeder futures were higher with grain prices moving lower.
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 recovered as Trump promises farmers help on grain and soybean prices. Open weather is allowing harvest to move forward and the crop is large. Elevators are lowering the basis as harvest progresses in the plains. Corn basis levels in Guymon, Oklahoma are at +$.60 — basis the December contract.
SECRETARY ROLLINS CLARIFIES
“USDA has no current plans to offer payments to beef producers. We see how the government getting involved can completely distort the markets, and so currently there will be no plan,” Rollins said. “No plan is even under consideration to insert ourselves through payments into the beef cattle industry.”
“Instead, Rollins said, the government will focus on freeing up land, using funding from the One Big Beautiful Bill for animal disease prevention, and, hopefully inspiring the next generation of farmers.”
Rarely do we see common sense coming from the government. We applaud Secretary Rollins recognition of the damage government actions can deliver to the free markets. High prices in a free market are the cure for high prices. Price signals create responses from market participants and U.S. breeders are responding. East of the Rockies, the drought monitor shows the country to be in the best shape for forage in many years and with drop prices low, one can reasonably expect sharp increases in breeder heifers and coming calf crops.
Some will remember the dairy buy out when the government decided to help milk prices by offering large incentives to dairies to liquidate dairy cows and the result was a crash to the beef markets with all the extra unexpected beef on the market. Too often government interference in free markets have unintended consequences and those consequences overwhelm the intent.
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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