May 16, 2026
MARKETS
Early week trades at $260 were replaced Wednesday with sales in all regions at $265 live and $410 dressed. These prices are $5-7 higher. Those prices surprised many, but prices moved even higher at week’s end when packers paid $415 dressed in the north. Meanwhile the bottom line at the beef plant is suffering causing further cuts in the slaughter volumes in the coming weeks.
The week just ended was full of policy surprises both domestically and internationally. Trump dropped tariffs on imported beef then delayed the action within twenty four hours of each other. China recertified U.S. beef plants for export to China then reversed the action within hours. Few details of either action were available.
This past week’s slaughter was 535,000 head — 8,000 over the previous week, and 31,000 under last year. The struggle at the beef plants with negative margins will create a negative backdrop for slaughter volumes in the upcoming weeks. They are finding little relief from the cash markets for fed cattle. Supplies of fed cattle will continue short while springtime demand in the grocery stores should improve. Box prices barely moved this week and packers will attempt to stimulate demand with smaller slaughter volumes in the coming week.
Basis levels are favorable despite gains in the spot month. Seasonally the June contract is often dollars under the cash during May.
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#, 5# higher than the prior week, and 41# 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 .7% from the previous week at 88.6%. 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 move into summer periods starting with Memorial day the end of May, Fathers day and the 4th of July — all periods for beef to play a prominent role. The high price of beef is always a risk for damage to demand and the continuing interest of the administration to lower beef prices is a constant threat. Beef must suffer a loss of marketshare, not because of price, but simply because we are producing less beef. With the grind dominating much of beef consumption, imports will continue to rise.
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 flat for the week as select grade outsold choice for much of the week. Some expectations are for improvement in the middle meats as we near spring and more cookout interest in steaks. Slaughter volumes will continue to be dictated by processing margins. The normal season pattern of increasing spreads in the quality grades may not develop this year as northern calves placed on feed come to market.
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. An abundance of Certified Angus beef has caused gyrations in pricing that sometimes loses the premiums in the maketplace. Retail stores are adjusting the marketing strategies to the new reality of heavier cuts, higher quality grades, and delicate pricing variables between the cuts to assure turnover in the stores.
Replacement markets
May often brings spring rains to enable pasture conditions in the plains to accommodate summer grazing programs. Many cattle moved early off winter grain fields in April and the movement will likely be seen in the monthly COF report due in the coming week. Movement and placements is likely to slow in May. Placement of cattle on feed continues to show heavier placement weights on beef feeder cattle following the same pattern seen in the nation’s feedyards for finished cattle. Many of the reports fail to separate placements, into dairy/beef cross cattle or beef placements. Beef/dairy crosses are placed at lighter weights than beef yearlings that are placed at heavier weights. USDA has failed to update industry changes in many ways but noting the placement changes featuring dairy beef crosses is also creating gaps in understanding the rebuilding of the nation’s cow herd because of placement of dairy heifers is camouflaging the decline in placement of beef heifers.
The drought monitor is a map showing regions of the country under stress for lack of normal rainfall. The map is compiled over a period of time and the current status of many regions is often misrepresented by the latest map becaused of updated information. The latest map shows deeper stress in many areas but since publishing the map, rains have fallen in many of the stressed areas. Rains have brought some relief to the southeast and parts of Colorado and Kansas. The increase in storm clouds has also increased wildfire risk in many dry areas.
Compared to last week; Feeder steers 5.00-10.00 lower. Feeder heifers steady to 5.00 lower. Steer and heifer calves not well tested and very limited sales 10.00-20.00 lower. Several un-weaned calves included. Demand for feeder cattle turned moderate when cattle futures made the flip to trading into the red. Cattle futures started the day higher as slaughter cattle trade once again pushed thru record highs last
week. Boxed beef prices also opened the day higher. Cattle futures ultimately closed lower and remain very volatile. The realities of fewer cattle numbers continue to take a back seat to other things happening in the industry. On another note, some rains reached most all of the state over the weekend but amounts were anywhere from a trace to 2.5 or 3 inches. Quality mostly average. Supply included: 100% Feeder
Cattle (53% Steers, 44% Heifers, 3% Bulls). Feeder cattle supply over 600 lbs was 77%
Compared to last week: Steer calves 5.00-10.00 higher in a limited supply of number 1 cattle. Heifer calves steady to 5.00 lower. Bulk of supply consisted of either unweaned or soft fleshy short-weaned cattle. Quality did improve from very plain to plain by the end of the sale. Parts of Oklahoma received rainfall over the past week, but showers remained scattered and inconsistent. Some producers commented that
pasture conditions resemble what is typically seen in August. Supply included: 100% Feeder Cattle (45% Steers, 50% Heifers, 4% Bulls). Feeder cattle supply over 600 lbs was 18%
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 moving lower. Disappointment regarding no announced trade deals following the summit meeting between Xi and Trump sent grain prices lower. Grain basis levels are moving higher driven by increasing transportation costs. Corn basis levels in Guymon, Oklahoma are at +$.80 — basis the July contract.
RISK MANAGEMENT — Disruption and Dysfunction
Transacting risk management tools in the current trade environment requires a new level of expertise that few are experienced or skilled sufficiently to handle. Risk management by design is a strategy to bring a livestock purchase to finish with the desired result of delivering a positive outcome. When the current inputs are assembled and various strategies deployed searching for a positive result, no viable model presents itself. The risk manager must search for Plan B.
Plan B translates into dodge ball or searching for a pathway through all the hazards and obstacles hoping to select the right option. The pathway is full of choices based on guesswork, hope or luck with little certainty or predictability. Decisions are made in an unstable political environment directed by President Trump’s impulsive announcements on trade or war. This plays against a backdrop of all time highs on cattle prices accompanied by record breaking losses in the beef plants. If futures positions are part of the strategy, poor liquidity and frequent computer driven order flow can overwhelm the marketplace and make timing a nightmare to position execution.
Most market participants are bracing for a shock, and they can’t identify the source of the shock. We are all waiting for the other shoe to drop. It could be: 1) another plant closing, 2) beef imports, 3) consumer backlash, 4) restarting the war, 5) another administration attack to lower beef prices, or 6) another period or drought. The marketplace is anything but stable. It is inclined toward dysfunction and disruption.
The past few years have delivered one of the longest periods of profitability for the live sector in beef business history, and all good things must eventually come to an end. Knowing the end of a bull market is near, or nearer, is an immediate cause for anxiety and stress. The best approach is to always remember the importance of focusing on those things you can do something about, ignoring the things you can’t, and having the wisdom to know the difference. [The Serenity Prayer]
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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