April 11, 2026
MARKETS
The sale of one transaction mid week in Texas seems to be an outlier raising more questions than answers. The cattle transaction was reported on 2400 head at $246 — definitely something with a smell and worth investigating. On Thursday another 250 head sold in Texas at $244. Late Friday the Texas Cattle Feeders Association that provides a weekly roundup of cash prices in Texas reported -0- sales for the week. In the north extremely light volume of sales were reported late Friday mainly at $250 –$4-5 higher than last week.
Futures prices seem to be leading the market sharply higher. Packers of course are resisting this increase because box prices are in an sharp decline as the cost of live cattle posts gains of $10 cwt. last week and another $5 this week. Speculative longs have entered the futures markets possibly based on their analysis of the COF numbers that USDA may have gotten right. Weekly slaughter is falling well under expectations for this period based on reported placements last year.
This past week’s slaughter was 512,000 head — 21,000 under the previous week, and 52,000 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 rose. Ideas of a larger slaughter volume because of the JBS Greeley plant operating were dashed as processing margins took a major hit the past two weeks.
Futures continue to post gains and lead cash prices higher.
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 955#, 2# lower than the prior week, and 40# 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 were mixed with select prices higher than choice cuts.
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 exceeds the 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. Grading reached an all time high.
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: All classes lightly tested following the Easter Holiday. Feeder steers and heifers steady to 4.00 higher. Steer calves mostly steady. Heifer calves 2.00-5.00 higher. Demand good for all classes. Quality average to attractive with several thinner fleshed cattle available. Good rains moved thru portions of the state last week, some spots up to 9 plus inches but most receiving up to 4 inches. Areas to
the North and West were left high and dry. Supply included: 100% Feeder Cattle (61% Steers, 1% Dairy Steers, 34% Heifers, 0% Cows, 3% Bulls). Feeder cattle supply over 600 lbs was 60%.
Compared to last week: Steer calves over 500lbs steady to 5.00 higher, under 500lbs 25.00-30.00 higher, conservatively. Heifer calves 15.00-20.00 higher. The market has been confusing over the past few weeks, but today it turned outright erratic. Buyers had “got to have them” orders for fly weight cattle, while 500-600lbs were only modestly higher. Quality was plain throughout the sale. The best quality was on
unweaned calves. Most of Oklahoma received a good rain last week and now grass fever has arrived. CME futures traded in the red, today, but that did nothing to slow aggression. Boxed beef select is trading higher than choice today. Supply included: 100% Feeder Cattle (43%Steers, 52% Heifers, 5% Bulls). Feeder cattle supply over 600 lbs was 11%.
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. While corn prices have moved lower, the corn basis is making gains. Corn prices has been stable most of this year and attention will now moved to the upcoming crop where most analysts expect a decline in corn acres. The most recent figures set corn acres at 95 billion acres– down 3 billion from last year. The 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.
USDA QUALITY GRADES
The evidence of material changes in the national and regional quality grades for fed cattle is obvious. In Texas for example, the percentage of USDA Primes just exceeded the percentage of USDA Select carcasses. Nationally, the percentage of Prime is almost twice the percentage of Select. The current week’s report on boxed beef sales reported Select boxes were bringing a premium to Choice boxes. Quality grade data is assumed to be accurate given the fact USDA inspectors are in every beef plant. Changes are the result of management marketing decisions and animal biology.
Several factors are responsible for this change. The first and most obvious is the extension of days on feed for all fed cattle. Cattle are fed longer and to a heavier weight and the natural result is better grading. Another major factor is the rapid development of the beef on dairy breeds occupying an ever-larger percentage of feedyard space on the southern plains during the past 3-5 years. The dairy/beef cross cattle, mostly AI with angus semen, deliver carcasses grading 70-80% choice and 10-20% prime. These cattle have tended to replace Mexican cattle that have all but disappeared following the border closing.
The change in quality grade has provided the consumer with a higher quality product, but also with less definition within the grading categories. Within the choice group, the marbling range is quite large with only Certified Angus (CAB) attempting to break this group into sharper focus. CAB qualifications limit the brand to the top 1/3 of the choice category and requires a black hide. Because the dairy cross cattle are using a angus bull semen, most of the calves qualify for this designation if they reach the top third of choice.
The implications of these changes in quality grade will now be tested in the marketplace. Hard earned premiums garnered through improved genetics and better grading may not be properly rewarded. The surfeit of cuts in the Choice category needs further differentiation. The seasonal pattern of a choice/select spread that using widens into summer as more calves are in the kill in the northern areas, might not develop this year. More emphasis on the Prime/Choice spread needs to be reported by USDA. Finally at the meat counter, the consumer needs more information about the new cuts created from higher grades and larger cuts of beef.
MANDATORY PRICE REPORTING
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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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