August 28, 2025
THE MARKETS
Steady bids by the packers of $245 in the north were countered with asking prices of $250. In the south a sprinkling of cattle sold in Kansas at $242 with most asking prices at $245. Show lists are smaller in all regions but next week’s slaughter is also expected to decline with next Monday’s holiday. It is likely we will begin to find some transactions developing today.
Processors are responding to the recent improvement in box prices by increasing slaughter volumes making plants more efficient and further improving their margins. They will be careful not to overdo the increases.
This past week’s slaughter at 550,000 head was 20,000 over the previous week and 59,000 under last year. Two weeks of larger slaughter volumes will test the resiliance of the box prices and the attitude of retailers to restocking for the post holiday period.
CATTLE FUTURES. Futures posted gains excepting the spot August contract that will expire this week.
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 919# flat with prior week and 17# 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 also flat with the previous week at 83.0% .
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 daily fluctuations of the primals represents seasonal changes and consumer preferences caused by pricing. The recent drop in slaughter volumes and increase in retail prices will direct store features to other meats.
The Cutout. Box prices lost their momentum. The month of August has been a month of transferring the pain of high prices from the processor to the retailer.
Replacement markets
As the herd rebuilds producers will be forced to live with smaller supplies — applying price pressures to all the middle operators in the beef chain. They will face the same challenges that have been present in the nation’s beef plants for the past two years. Navigating this operating environment will become increasingly difficult. This week opened with stronger pricing across the nation’s auction markets. The evidence of price pressures was most obvious on days with sharp breaks in feeder futures, the cash markets paid no attention.
Keeping an eye on relationships between various classes of cattle by sex and weight always is an indication of trends developing in the marketplace. Recent activity has been noted on the price movement of heifers compared to steers. Forage is abundant in many regions of the country and many operators see opportunity in building breeders either for their own account or for resale to other breeders. Many breeders who have been slow to rebuild because they believed prices were too high, have reentered the market deciding higher prices are here to stay.
The price movement in live cattle futures has a direct impact on auction prices of feeder cattle. The back months of the live cattle contracts have shown unusual strength playing catch up to the front end. This price action will continue to pressure the spot prices for replacement cattle as more operators become convinced that we may not have seen the market tops.
The drought monitor continues to favor herd expansion. Timely summer rains have kept grass and crop conditions favorable. 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 4.00-10.00 higher. Steer calves 10.00-20.00 higher, spots sharply higher. Heifer calves under 500 lbs unevenly steady; over 500 lbs 8.00-12.00 higher. Demand continues very good for all classes. Today’s run very similar to a fall calf run with many un-weaned calves included. An unseasonable cold front is making it’s way through the state brining some much needed rain to some areas. Temps will also cool back to the 70’s and 80’s for the next several days. Weigh-ups are running gaunt to average. Please note: Cattle marked as Un-Weaned are weaned less than 45 days or not at all. Supply included: 100% Feeder Cattle (53% Steers, 43% Heifers, 4% Bulls). Feeder cattle supply over 600 lbs was 61%
Compared to last week: Steer calves steady to 3.00 higher. Heifer calves unevenly steady. Demand good. Quality average. Welcome relief from the heat has arrived this week with cooler temperatures and timely rainfall across the region. Supply included: 100% Feeder Cattle (56% Steers, 38% Heifers, 6% Bulls). Feeder cattle supply over 600 lbs was 31%
Feeder Cattle Futures. Feeder futures held modest gains. Cooler weather encouraged more support across the nation’s auction barns.
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 softened. USDA set a large benchmark by raising the estimated yield and this could lead to disappointment at harvest. Elevators are lowering the fall basis in anticipation of a large corn crop. Corn basis levels in Guymon, Oklahoma are at +$.70 — basis the December contract.
LOOKING FOR A MARKET TOP
The tricky thing about calling for a market top is the forecast is never the proof. During this phase of the liquidation cycle, and especially this year, many analysts have written opinions calling the current pricing the top and expecting declines from this peak. Many customers, acting on those recommendations, have sold futures hoping to avoid the inevitable fall that will occur someday.
Technical traders look for pricing signals in the charts and speak a language many in the industry find foreign and confusing. This is not to discount technical signals because price patterns over the years have proven to be reliable assists for traders but never as positive proof of future prices. While technicians are using Fibonacci retracement to discover Bollinger Bands, most observers and participants simply watch in awe as prices move sharply higher or lower for no apparent reason.
Some might want to simplify the discovery of the market top by associating it with that point when cattle supplies have reached their low point. This would push the event out into the future as the full thrust of heifer retention is not expected for many months. The top rarely occurs when supplies are the shortest because market participants anticipate the event and take actions to counter the arrival. Futures prices also play an important role in anticipating future events and their price influences the price of replacement cattle so the top on replacement cattle rarely matches the point of shortest supply.
One factor no one can anticipate and critically important to discovery of the market top is consumer behavior. When do high beef prices reach a stopping point for the consumer? How elastic is beef demand? These questions are unknowable because they are linked to macroeconomic indicators like full employment, tax policy, balance of trade, interest rates, and tariffs. Left in the confusing world of price forecasting are the people necessary to producing the nation’s premier meat with only their wits and resilience to guide them.
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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