February 7, 2026
MARKETS
Packers pushed bids to $245 in Texas and Kansas to complete the buy for next week. Sales in the south for the week ranged from $242 to mostly $245. In the north, the range was larger with cattle selling from $238-$245 [late] live and light trade at $378 dressed.
The administration made use of old news to announce the signing of the trade deal with Argentina reducing tariffs and enlarging the quota of imported beef Argentina could export to the U.S.. Argentina beef last year represented 2% of imported beef. The administration said Friday the Argentine imports would quadruple this year — a number at variance to previous announced numbers.
This week’s carcass weights showed a 11# drop that likely represented both the current status of feedyards and the impact of frigid temperatures in the winter storm. Those conditions could continue as the Ohio valley and northeast remain suffering extreme cold.
This past week’s slaughter of 536,000 head was up 8,000 from the previous week’s slaughter volume, but 47,000 under last year. Box prices ended the week with good demand. 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 the plant closing and new adjusted slaughter rates in the remaining plants.
An administration spokesperson said today Trump would quadruple the imports of beef from Argentina this year. Futures sold off daily highs following the announcement. The administration’s attacks on beef prices have allowed hedged cattle owners a favorable basis levels in the spot contract.
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 949#, 11# lower than the prior week, and 27# 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 .9% from the previous week at 88.6% — another all time record.
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 overheated replacement market will slow the forward contracting of purchases this year. The discounted price in the deferred futures contracts will not encourage cattle owners to forward price cattle at a loss. Favorable forward basis levels can always incentivize sellers to enter into basis contracts to be priced later.
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 spring, the middle meats should provide support for the cutout. USDA Prime cuts are carving out a larger slice of the grocery offerings. 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 turned higher to close the week. Obviously some shuffling in the supply chain has been necessary with the Tyson plant closing. Most of the beef plants are located in the center of the country so very little logistical harm is caused by the plant closing.
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 hefty 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.
The drought monitor is showing some areas of stress. The Texas Panhandle has been a small local spot failing rain or snow this winter. Moisture conditions and wild fire possibilities will play into the rebuilding of the nation’s cattle herd. If the plains is blessed with timely spring rains, the increase in cattle numbers will happen sooner rather than later.
Compared to the last sale two weeks ago: All classes lightly tested. Feeder steers 4.00-12.00 higher. Feeder heifers 3.00-8.00 higher. Steer and heifer calves mostly steady. Demand was very good with several buyers present, even with a light run. Quality average to attractive. Quite a bit of snow remains on the ground, but the big thaw is on. Temperatures are expected to run warmer than normal for the next 10
days or so. Quality average to attractive. Supply included: 100% Feeder Cattle (58% Steers, 41% Heifers, 1% Bulls). Feeder cattle supply over 600 lbs was 64%
Compared to two weeks ago: Feeder steers 10.00-15.00 higher. Feeder heifers 10.00-20.00 higher. Steer and heifer calves 20.00-25.00 higher, conservatively, in a light test. Demand very good. Quality mostly average with several drafts of thin fleshed cattle. After last week’s winter storm closing most sales, buyers came back extremely aggressive across all classes of cattle, working to fill orders that went unfilled
last week. Temperatures warm into the lower 70s for the rest of the week. Supply included: 100% Feeder Cattle (55% Steers, 44% Heifers, 1% Bulls). Feeder cattle supply over 600 lbs was 72%
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 basis levels in Guymon, Oklahoma are at +$.50 — basis the March contract.
THE ADVENT OF THE AI BOT
AI Bots perusing the web for market moving information is a new phenomenon and some of those trades are finding their way into the cattle pits. They can be quick moving, much faster than humans, but they are now finding the analysis garnered from these excursions on the web, require something more than speed and quick analysis. The Bots quickly pick up a news story that could contain market moving information, then immediately analyze and convert it into a trade strategy that feeds execution orders that could last only a few minutes or all day. The money behind the AI Bots is massive and sometimes rather than flooding the market with orders, they slow feed orders into the marketplace all day.
The weakness in this activity is the fact the intelligence it relies on is flawed. It lacks context. The union vote on the JBS Greeley plant is only to give 7 day notice to negotiate, not to immediately strike. The negotiations could go on for months. The signing of the trade deal with Argentina was already known by the marketplace and only increases beef imports from Argentina currently at 2% and the impact may be months away – hardly a material change.
Cattle futures have always had market makers — traders who sense a market distortion or over-reaction and act on it. The role of the market makers is to ascertain when market news has caused prices to move too far and correct the distortion. Unfortunately, some of the best market makers in the cattle space have turned wary of quick correction strategies because they fear front running by insiders aware of government actions that may impact cattle prices. The humans who used to make the judgement calls on the appropriate price levels are today afraid that behind the scenes is a Trump bombshell waiting to be released.
Computerized trading is changing the way markets behave and affording seasoned traders an opportunity to capitalize on the flaws of the new trading Bots. Someone will have to pay for the losses suffered by the flawed Bot trades leading to improved and more intelligent Bots, but until they are retooled, market makers can show their skills. In the end, it is the cattle owners in the cash markets that are the true market makers. When the futures turn down, and packers bid lower, they refuse the lower bids by saying NO.
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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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