September 17, 2025
THE MARKETS
Packers hope the pressures from weakening box prices will weigh on futures prices and those declines will influence fed prices. The other possibility is fed prices holding or gaining and the impact sent straight to their botton line. Fed supplies will remain tight. Rumors and misinformation continue as the driver for volatility in the futures markets. Asking prices are higher. Bids of $239 have been passed in Kansas. Show lists are down in Texas and Nebraska and up in Kansas.
Prices last week in the south at $240 moved slightly premium to northern prices that were mainly $238-$240 — $3-5 lower. Dressed sales ranged from $375-$378 – $5-7 lower.
This week’s slaughter at 565,000 head was 70,000 over the previous week and 59,000 under last year. Packers remain barely in the black and will be encouraged to hold the volume of slaughter near this week’s levels providing the box prices do not tank. Box prices were modestly softer at week’s end.
ESTIMATES OF ESTIMATES CATTLE ON FEED September…….99.1……..98.7-99.7 PLACED DURING August ………………….91.0……..89.0-93.5 MARKETED DURING August …………..87.1…………86.5-87.6
CATTLE FUTURES. Live cattle fell as weak demand was reported in the box prices.
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 932# flat with 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 down .6 from the previous week at 83.3% .
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 mixed but a revision in last week’s slaughter upwards 4000 head showed late sales. Many expect this week to post a slaughter closer to 600,000 than 550,000. Packers plan to hold on to recently acquired positive margins and larger slaughter volumes serve that purpose. As weather cools, beef demand may support the demand side as retailers work higher prices into the meat counter.
Replacement markets
Winter grazing prospects are good and many farmers are drilling wheat into well watered soil for a change. Not all farmers are anxious to graze their own cattle this year and many are soliciting cattle for grazing from other cattle operations. The price of grazing is up in the air as farmers find little interest from operators to place cattle on wheat fields and having to pay $1/pound for grazing and care. Grain prices are cheap enough that feedyard gains or more competitive and reliable than grazing prices.
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.
Receipts fell from last week and prices were softer mainly from unweaned offerings of calves. Health issues with purchases during a seasonal period when daytime highs and nighttime lows are extreme will threaten the value for many high risk offerings.
Steer calves were $5-$10 lower while heifer calves were $10-$15 lower with mostly unweaned calves.
Feeder Cattle Futures. Feeder futures fell as weak auction prices influence the market.
The lack of liquidity in the feeder contract provides a perfect environment for prices to move too far in either direction. Poor liquidity leads to extreme volatility. Overdone directional price movements frequently require corrections and traders sense the vulnerability of the contract that needs to be cash settled but the contract index needs a redo.
Feeder Cattle Cash Index. The index is tracking the moves in cash prices.
Video and Internet Replacement Cattle Auctions. The movement from traditional private treaty sales to Internet auctions has been slow but steady. Producers have chosen this option as the primary marketing tool for most of the cattle offered in the replacement markets.
National Weekly Feeder Summary released on Friday of each week tracks the national prices by region for last week.
Grain Futures. Corn prices were higher. The USDA report reduced the estimated yield by 2 bushels to 187. Corn acres were increased 1.4 million acres to 98.7 million acres. Elevators are lowering the fall basis in anticipation of a large corn crop. Corn basis levels in Guymon, Oklahoma are at +$.60 — basis the December contract. The corn basis has lost .25 cents in the past week.
GOING VIRAL
With the internet, the speed of receiving news is immediate. The ability to mine that information into gold is the objective of thousands of market makers armed with computers and near proximity to trading platforms where nano-seconds matter. The commodity markets and the cattle contracts are only one of many targets of for-profit trading. The rout this past Tuesday was a quick reminder of the risks to the marketplace.
Traditional retirement plans and investment portfolios held the proper balance to be 60% stocks / 40% bonds. Newly redesigned portfolios recommend the balance includes commodities at 25-30%. Welcome the advent of managed futures professionals. Their tools are AI developed computer programs that scan the web for information that can be market moving and turn the results into order execution.
The problem is much of the information requires context and analysis before forming an opinion about market direction. The discovery of a new world screwworm in Chihuahua (this is a made-up example) has little to do with the direction of October Live Cattle prices. The race to optimize the information directs order flow into a marketplace that lacks liquidity. The cattle contracts, that are poorly designed, cannot handle large order flow and the result is exaggerated price moves in both directions. This in turn triggers stops and technical orders to further aggravate the movement.
The solution is improved contracts that eliminate delivery for the live cattle contract and rebuild the cash settled feeder contract with a broader and more accurate index. This publication has been approached several times by trading firms to acquire archives of the daily posts with payments for the content promised. God forbid anyone scan the information contained on these pages and attempt to mine the direction of the futures. There is a reason we don’t have archives. We can’t even guess right half the time.
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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