March 7, 2026
MARKETS
Trade developed in the north mostly at $240 live and $380 dressed. This was steady with the low end of last week’s trade range. Dressed sales were $3 weaker. In the south cattle sold for $240-2 with late sales following the sharp decline in live cattle futures.
Damage to our economy from skyrocketing oil was evident everywhere. Oil spiked above $92 — up almost 40% in the past week. Grains were sharply higher. Transportation costs will jump for all goods and services. Trump demanded “unconditional surrender” from Iran raising the bar for a settlement and setting the stage for an extended war.
This past week’s slaughter was 521,000 head — 2,000 over the previous week’s slaughter volume, and 58,000 under last year. The packers are deploying the only weapon they have to restore margins — sharply downsize the slaughter. The sharp slaughter decline for three weeks, and the accompanying rise in box prices, have combined with lower fed prices to sharply narrow the negative margins at the beef plants.
PUTTING ECONOMIC DECISIONS IN THE HANDS OF PEOPLE WHO PAY NO PRICE FOR BEING WRONG
History should furnish important lessons to us. Over the past fifty years, we have witnessed government laws, decrees, or orders that interfere with free markets and how they inevitably go awry. (Dairy buy out/ Nixon Price Freezes, etc.) Senator Chuck Schumer is living proof some people never learn. He introduced a bill to force the meat packers to shed multi-specie plants and only process one animal species. Without spending several pages explaining why this would never work, suffice it to say, idiotic schemes by government to lower or raise beef prices are forever doomed to failure.
Economic factors weighed on the futures market as oil and grains jump higher. The jobs report for February showed the nation lost jobs and indicated the job’s market is weakening.
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 953#, 1# higher than the prior week, and 30# 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 down .6% from the previous week at 88.8%. The quality grade should begin a slow decline lasting into summer.
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. Inevitably the higher the price, the increased risks 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 leveled at week’s end.
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 push in the replacement market is for stockers for summer grass. This has created a two tier market in auction barns around the country. Stocker operators are willing to place heavier and heavier cattle on summer grass. The heavier offerings moving to summer grass will come back to the feedyard as heavier yearlings. The heavier yearlings will produce heavier carcasses and the industry will find out the genetic potential of many of these cattle.
The USDA report indicating 15% more cattle on winter grain fields in Kansas, Oklahoma, and Texas is getting kickback from many operators in those areas. Local cattle owners are reporting less cattle rather than more cattle on wheat and oats. Dry areas like the Texas Panhandle never placed many cattle on wheat, while central and south Texas placements were late and reduced by high prices and limited supplies.
Benchmarking prices for replacement cattle has become a popular pastime. The advances of 40-50% over year ago prices has some operators gasping. A recent video auction brought in some Arkansas calves weighing 320# at $7.25. The dollars per head for some replacement cattle are nearing the price received last year for fed cattle.
The drought monitor is showing some areas of stress. The Texas and Oklahoma Panhandles have been a small local spot failing rain or snow this winter. The dry conditions in the southern plains sets the stage for a high risk for wildfires. Moisture conditions and wild fire possibilities will play into the rebuilding of the nation’s cattle herd.
Compared to last week: Feeder steers 2.00-8.00 lower. Feeder heifers 4.00-10.00 lower. Steer calves 5.00-15.00 lower. Heifer calves 10.00-20.00 lower. Demand is moderate to good but still cautious. Cattle futures closed in the green today, after 2 days of being sharply lower. Quality average to attractive. On a good note, rain is in the forecast for this week. Supply included: 100% Feeder Cattle (57% Steers, 43%
Heifers, 1% Bulls). Feeder cattle supply over 600 lbs was 75%
Compared to last week: Steer and heifer calves 10.00-20.00 lower, conservatively. Today’s sale felt like October, front-end cattle were unweaned with alot of thin fleshed plainer type cattle. Buyers were very cautious and definitely didn’t get in each other’s way. Supply included: 100% Feeder Cattle (45% Steers, 48% Heifers, 7% Bulls). Feeder cattle supply over 600 lbs was 20%.
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. The war has sharply increased grain prices. Both corn and wheat have posted large grain this past week. Analysts and the government will begin weighing in on corn acres for this year’s crop. Most expect a small decline in corn acres. Corn basis levels in Guymon, Oklahoma are at +$.55 — basis the May contract.
THE SWAP RATE THAT IS DESTINED TO TURN OUT BADLY
For those interested in remaining in the business of producing beef, the swap rate warns you of troubling times ahead. For each animal sold, the producer must decide if they desire to replace the sold animal, one for one, or less than full replacement numbers. No matter whether the choice is one for one replacement, or less, the replacement animal will create a negative margin on day one.
The economics are simple. Year on year fed prices have increased from $200 a year ago to $240 today or 20% increase. An 850# feeder steer has increased from $264 last year to $355 this year or 35%. Replacement costs are increasing at a much faster rate than fed prices. Moreover, the expectations for fed prices into the future are not higher but instead $10-$15 under current cash.
There are many theories on how to manage risk in this environment, but most of these theories fail to deliver any protection to cattle owners and many strategies amount to little more than directional guesses. They ignore the fundamental problem that buyers have overpaid for cattle. The reason people are overpaying is because there is too much equity in the live sector accumulated over several years of good times. Too many people with too many dollars in their pockets will buy until they suffer enough that they can no longer buy.
The final forced adjustment will be to feeding capacity. The custom feeders who are attracting customers with generous financing packages that allow skinny margins will be forced to eat some of the customer losses. The unhedged operators will dig deep into equity to fund losses that will inevitably occur. The feeding capacities will be forced down the same road as the processors – downsizing to fit the current herd size.
USDA CONTACT FOR CORRECTING MANDATORY PRICE REPORTING
mpr.lpgmn@usda.gov
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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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