April 5, 2026
MARKETS
Packers watched any margins they had earned over the past three weeks disappear. Cash prices for live cattle moved quickly to $245-6 live and $385 dressed in the north while live sales in the south were at $245-6 moving to $247. At the same time, box prices turned lower losing over $4. This change of events will cause packers to pull back slaughter volumes as margins moved into the red. Prices were $10-$13 higher.
The trend line towards compressed periods of trading in cash transactions for cattle has definitely contributed to volatility. Fluctuations of $10 per hundredweight in cash prices from a prior week clearly establishes increasing volatility. Extending these large fluctuations to the entire cattle inventory of any beef operator, in mark to market borrowing bases, can have a dramatic impact on balance sheet.
This past week’s slaughter was 533,000 head — 10,000 over the previous week, and 53,000 under last year. The slaughter fell short of some early week estimates as packers margins suffered from both sides of the market – inputs and outputs. Box prices weakened while fed cattle prices surged. The numbers of available cattle brings into question USDA data regarding the on feed numbers. The post Easter period and opening of spring often revives beef demand.
The percentage of fed cattle hedged has risen. Many operators were convinced the market had topped and as is frequently the case — they may have been wrong. For hedged cattle owners the recent large gains in cash prices have been lost on the futures markets. The markets are closed for Good Friday.
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#, 9# lower than the prior week, and 42# 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 unchanged from the previous week at 89.3%. The quality grade should begin a slow decline lasting into summer, but with out weights at record highs, grading will remain high historically.
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.
Beef demand will now transition from a historically soft seasonal period to the spring period that has featured improved demand. Demand normally improves following Easter. The high price of beef is always a threat or risk of damage to demand. To date it has been slight but there can come a tipping point and everyone is on the lookout for that point. Beef must suffer a loss of marketshare, not because of price, but simply because we are producing less beef.
USDA Prime cuts are carving out a larger slice of the grocery offerings. Many retailers are struggling to market these cuts and often feature discounts to encourage consumption. This is a benefit for consumers who find bargains on premium cuts. 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 fell as this week’s larger slaughter pushed prices lower.
The impact of larger cattle and higher quality grade percentages has been to provide consumers with increased volumes of higher quality beef. USDA Prime now equals in quantity the USDA Select grade. Retail stores are reformating both the cuts and the marketing strategies to adjust to the new reality of beef offerings.
Replacement markets
As we move into April, many areas are reporting hot dry weather that is forcing the remaining cattle on wheat fields to market. High prices and weather stressed grazing locations set the stage for movements. These cattle are moving into a marketplace hot for replacement numbers as empty pens occupy a large portion of the plains. Many of the Colorado feedlots are opting to not replace empty pens and are awaiting a resolution of the JBS Greeley strike. This season is presenting a conflict for lighter weight offerings that must have rain on parched pastures to turn out this spring.
Modeling the breakevens for current purchases is enough to stress the most calm and rational of lenders but large negative margins at the feedlot level are foretelling trouble in the feeding sector. On any given turn of inventory, the negative margins at purchase might survive the loss by future cash increases far beyond current estimates. Eventually those margins will turn into losses and at the extremes, the current estimated losses will become magnified by a cash market that turns sharply lower instead of higher in the future marketing periods. Could a feedlot animal lose $1000/head?
The drought monitor is showing some areas of stress. The Texas and Oklahoma Panhandles, western Kansas, and parts of Colorado, Montana, and Wyoming are dry. The dry conditions in the central plains sets the stage for a high risk for wildfires. Nebraska has suffered wildfire losses of the magnitude of several hundred thousand acres. Moisture conditions and wild fire possibilities will play into the rebuilding of the nation’s cattle herd.
Compared to last week: Feeder steers and heifers 4.00-8.00 higher. Steer and heifer calves mostly steady. Several feeders off winter pasture available. Demand very good. Several mentions of cattle being here because the wheat has played out due to lack of rain. Some wheat in Southwestern Oklahoma has been reported only about 3 inches tall and already heading out. Quality average to attractive. Rain is in the
forecast for the week but much of it looks to be in Eastern Oklahoma. Grass accounts have practically dried up. Supply included: 100% Feeder Cattle (58% Steers, 41% Heifers, 1% Bulls). Feeder cattle supply over 600 lbs was 76%
Compared to last week: Steer calves unevenly steady with fly weights and 6 weights holding the strongest. Heifer calves 10.00-15.00 lower, following last week’s extremely aggressive market, on heifers, that simply couldn’t be sustained. Front-end prices for steers and heifers remain strong, although supply of those higher quality cattle continued to be very limited. Overall quality was noticeably plainer compared to last week. Buyers were definitely more cautious this week, stating lack of moisture has farmers pulling back. The market did get stronger after the board closed, today. Supply included: 100% Feeder Cattle (47% Steers, 48% Heifers, 5% Bulls). Feeder cattle supply over 600 lbs was 27%
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 moved higher to close the week. For the most part corn has been stable this year with small fluctuations in price or basis. The length of the border closing for cattle from Mexico has created a newly developed finishing industry in Mexico and new demand for American corn to feed those cattle. Most analysts expect a decline in corn acres. Corn basis levels are changing with the rising energy cost that makes transportation more expensive. Corn basis levels in Guymon, Oklahoma are at +$.65 — basis the May contract.
BREAKING WITH HISTORY
The assumptions of the past are often discarded in confusion about the future. Seasonal price patterns have established a history that is not to be accepted by conventional wisdom but debated during changing times. The status of established price patterns has charted new territory and opened new inquiry into market behavior. Just a short two weeks ago we published an opinion piece wondering if all expert and industry viewpoints point one direction, might it be possible for the opposite to occur.
This past week brings into focus the notion that many may have been wrong to assume the top for this cattle cycle was in and prices were destined to head south. Now many are wondering if breakevens for later this year and next at $250 cwt. that were believed to be doomed to failure might provide a new reality by conforming to the price patterns of the past two years when the April high was taken out by even higher summer prices.
The bears have highlighted the closing of one Tyson plant and downsizing of a second, and now the strike at a JBS plant as a change in the leverage between packers and fed cattle owners. Consumers remain loyal to beef, but some are raising the affordability issue for high priced beef in a budget already burdened with sky high gas prices. Some are questioning whether the herd can rebuild given the high prices for replacement heifers and all the expenses associated with breeding — amid an operating environment where Trump is determined to break the prices on beef.
Packers ended last week willing to take on more inventory at even higher prices. In the coming week, cattle owners will oblige by asking even higher prices and could this be the trajectory leading into the summer. One common thread throughout the past year is a lack of clarity for any of the factors affecting the markets. Will Secretary Rollins begin to open the border as she indicated last week? Will the war with Iran wind down or ramp up? Will the drought in the western U.S. worsen? These external forces may hold the answer to market direction.
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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
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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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