December 2, 2025
THE MARKETS
Show lists were mixed with Texas and Nebraska down and Kansas higher. Surprisingly to the trade was the pop in box prices. Maybe shelf clearance for beef items was better then expected. This week will test the proposition of leadership between cash and futures with futures starting the week lower, but reversing course today and jumping higher on the opening. Healthy slaughter rates are expected both this week and next.
Last week, cattle owners in Kansas proved more prescient than other regions of the country. The result was packers forced to raise bids $5 to $220 Friday. Nebraska and Iowa were left to live with $208-210. The north – south spread widened to $10, premium the south, this past week.
Quality grading this year has remained well above last year [3-4%] and previous histories. The most obvious reason is the increasing out weights and days on feed, but also included in the mix is the increasing population of dairy/beef cross cattle that are very consistent on super high quality grade with many pens reporting only a few select grades. The USDA select category is becoming less important that the USDA prime and daily price reporting should begin featuring the choice/prime spread.
The holiday shortened week resulted in a small slaughter volume. This past week’s slaughter at 501,000 head was down 84,000 from the previous week and 32,000 under last year. Two factors are changing and reducing the availability of finished cattle — heavier marketing weights and placement of large amounts of dairy beef crosses that are on feed for a year resulting in slower turnover.
CATTLE FUTURES
Futures opened sharply higher Tuesday as traders watched cash prices and box prices ignore declining futures Monday.
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 957#, 1# higher than the prior week, and 32# 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 .2% from the previous week at 85.2% .
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. The problem that will slow forward contracting is the heavy discount held by the deferred live cattle contracts.
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. Prime cuts are carving out a larger slice of the grocery offerings. Holidays provide an opportunity for many families to spurge on food purchases.
There are some changes apparent in supermarket marketing plans for beef. Some have to do with price and others related to the increasing weight of the carcasses. More of the carcass is dedicated to the grind and retailers are packaging larger packages of ground beef to encourage larger dollar purchases. They also are offering more blend ratios. On the middle meats some of the steaks are changing how they are presented to the consumner. Many of the ribeyes have the lip trimmed because if it is included, the cut is too large.
The Cutout. Box prices were higher to begin the week. The supply of beef is being carefully managed by the processors. Because of improved quality grade, more prime cuts will be on the shelf this holiday season.
Replacement markets
Feeder futures have made a large adjustment downward in price, but now the shortage of replacement cattle and the demand for a short supply is causing the cash prices to resist downward pressure. Buyers are evaluating the future marketing period for the lighter cattle and deciding if the markets continue downward for yearlings and fed cattle, the lighter cattle have the potential for large losses. On the fundamental side, smaller supplies of replacement cattle translates into too few cattle being overpriced by buyer competition. 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’s light test: Feeder steers 8.00-15.00 higher. Feeder heifers 15.00-25.00 higher. Steer and heifer calves 20.00-30.00 higher, instance to 40.00 higher. Demand good following a pre and post Thanksgving move higher in the cattle complex at the CME. Though futures continue to trade some lower today, demand is good for all classes. Icy start to the day with light freezing rain and drizzle overnight causing major traffic problems this morning. Temperatures to remain in the 30’s today. Quality average to attractive. Supply includes several cattle in a Special Angus sale. These cattle are at least 60 days weaned with multiple rounds of shots, are Angus verified and some BQA (Beef Quality Assurance) as well. These cattle are marked as Value Added in the report. Several nice strings of cattle today. Supply
included: 100% Feeder Cattle (63% Steers, 0% Dairy Steers, 35% Heifers, 1% Bulls). Feeder cattle supply over 600 lbs was 55%
Feeder Cattle Futures. Futures prices bounced back with a fury following higher cash prices for all replacement cattle.
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 are inching higher. This year’s crop remains well above the 14.5 billion bushel crop last year and the small drop in estimated yield will maintain adequate supply/use ratios. The next USDA reports will provide more definition to this year’s crop. Elevators are holding the basis flat. Corn basis levels in Guymon, Oklahoma are at +$.60 — basis the December contract.
SHAPE OF THE MARKET
There has been a lot going on in the marketplace for cattle. The national herd is in the throes of rebuilding, and we are near the low point for cattle numbers and beef prices have established an historic high. These conditions have caused a national focus on high beef prices causing a Trump administration plan to lower prices. This situation combined with the Tyson plant closing, have created volatility and uncertainty within the industry.
The build up of heavy cattle in the north has also played into the hands of packers by allowing them to find weak sellers who, anxious to move cattle, have accepted lower bids that have cascaded into large losses of price for fed cattle. The fed cash market has now moved from $245 a few weeks ago to $208 this past week. Fortunately, the lower bids finally seemed to have reached a point where sellers refused, and assisted by healthy margins at the beef plant, packers were forced into reversing course and move bids higher.
The crystal ball moving forward is murky. Markets tend to find markers signifying factors bearing enough significance to move prices then crunch the inputs and ascertain a market direction. The known factors remain in place, but unknown factors continue to be introduced into the marketplace. Those unknown or unknowable factors have been the most difficult to evaluate or anticipate. The demand for replacement cattle seems to be undaunted by declining futures prices.
The underlying facts are mostly undisputed. Fed supplies are short and will be getting shorter. Even old cows are held back for one more calf. Cow slaughter will continue lower. Beef imports will help fill that gap. Packers will regain some leverage and, the large subsidies provided the cattle owners from losses at the beef plant, will not be available in the future. Retail stores and cattle owners may yet see higher prices, but the margins will be moderated by reduced processing capacity.
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.
Contact Us
The CATTLE REPORT will strive to answer all emails. Our editorial views are not always popular and sometime create controversy and are sometimes flat out wrong.