August 15, 2026
MARKETS
The winners this past week were the processors who reduced input cost by $7-$10 cwt. and increased box prices by nearly the same amount. Operating costs at each plant differs as do efficiencies by company but the margin change is one of the largest weekly changes in the past few years. Fed cattle cash sales continue to decrease in volume and more and more cattle are sold negotiated grid. Two major feeding state are no longer reported by Mandatory Price Reporting. Live sales last week ranged from $225-$235. Dressed sales ranged from $360 to $375 with both ranges large.
Tyson Foods announced a restructure of its beef operations to include closing one slaughter facilities at Joslin, Illinois and posting a “for sale” sign at its Pasco, Washington beef plant. Included in the restructure will be a phasing out of Eagle Mountain, Utah case ready facility. Tyson anticipates no change in overall slaughter rates but some redeployment in targeted plant destination for cattle supplies as numbers and conditions change. This announcement has been priced into the market for the past two days as rumors circulated in the industry. The downsizing of processing plants continues amid super sized losses. The irony is this announcement falls on the heels of USDA announcement of $500 million in grants to beef processors (not to include the Big 4) to make the market more competitive.
This past week’s slaughter was an estimated 517,000 head — 8,000 over the previous week and 19,000 under last year. This past week the slaughter volume increased and the slaughter weights fell. The beef production for the week remains under last year. The seasonal improvement in beef demand was felt despite the larger slaughter. Both box prices and live cash prices for cattle are now trading under last year. The status for fed supplies will remain tight through year end and the industry will be watching how the plant closings change the leverage between processor and feeder.
A close reflecting a momentus week of downward pressure on futures.
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 939#, 2# lower than the prior week, and 25# 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 85.9%. The quality grade has begun a slow decline but with out weights at record highs, grading will remain high historically.
The Weekly Steer and Heifer Grading Report reflects regional supplies of choice and prime cattle and often is determinative of regional differences in live prices. The report also indicates the current status of fed cattle offerings in each area.
Forward Cattle Contracts: Forward contracts are always a portion of the inventories the processors maintain for slaughter. Offered 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 movement of futures prices, either up or down, will relate to the number of forward contracts.
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.
Retailers will be looking beyond the summer heat. Improved demand should be expected as summer temperatures segue into cooler daily highs. Lower box prices converted to lower prices for individually priced portions on supermarket shelves, will catch the eye of price weary consumers. With the grind dominating beef sales, imports will continue to rise and those lean cuts will be blended with excess fat from the beef plants.
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 can 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. The box prices were flat at week’s end. Seasonally box prices advance in August. Box prices are now under prior year. Slaughter volumes will continue to be dictated by processing margins.
Replacement markets
Major adjustments are in the cards for replacement cost. Heat has delayed many marketing plans and now falling futures are forecasting large drops in the cash prices. The major feeding firms are backing off offerings and taking a wait and see attitude. Forward contracts will be difficult to find. Heavy marketing periods are on the horizon and plant and feedyard downsizing will be on the front burner.
Seasonally health problems begin for unweaned calves. Buyers are wary of stress caused by heat and weaning and many will avoid high risk purchases. Some sellers will also attempt to avoid marketing calves through local sales to eliminate extra movement and costs.
August and September feature large offerings of cattle for delivery this fall. Many owners of those cattle are hoping to receive today’s prices for tomorrow’s deliveries and may find disappointment in the bids offered for deferred deliveries. The stairway for prices is a downward slope extending outward and many feeding operations are shortening inventories for forward bought cattle.
The Drought Monitor is a map showing regions of the country under stress for lack of normal rainfall. The map is compiled over a week and updated every Thursday with data collected through Tuesday of that week.
Compared to last week: All classes lightly tested. Feeder steers steady to 5.00 higher. Feeder heifers mostly steady. Demand good for feeder cattle. Steer and heifer calves not well tested. Many un-weaned calves included. Demand moderate for calves. High heat and extremely dry conditions is limiting demand for calves, especially un-weaned calves. Numbers continue very limited. Yes it is hot, but it is summer and it is August. Numbers of feeder cattle and calves are tight as good markets had producers pulling cattle early and this practice has caught up with us. Most cattle auctions selling maybe half of what they did a year ago. Quality plain to average, few attractive. Supply included: 100% Feeder Cattle (61% Steers, 33% Heifers, 6% Bulls). Feeder cattle supply over 600 lbs was 60%
Compared to last week: Steer and heifer calves over 500lbs unevenly steady, under 500lbs to light a test to set a trend but a lower undertone noted. Most front-end cattle, today, were un-weaned and no trend to set on those classes of cattle. Today’s supply included 59% un-weaned cattle. Its August and buyers are being selective on buying cattle in this heat. Supply included: 100% Feeder Cattle (43% Steers, 45% Heifers, 12% Bulls). Feeder cattle supply over 600 lbs was 22%.
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 firmed at week’s end. The USDA balance sheet reduced corn yields, raised exports, and added 1.5 mm acres to this year’s corn crop. The various changes lowered ending stocks for the 2026/2027 crop year. Recent rains across much of the corn belt have improved crop conditions except in flooded areas. Corn basis levels in Guymon, Oklahoma are at +$1.05 — basis the September contract.
THE DYNAMICS OF DOWNSIZING
The inevitable move to right size kill slots to match cattle supplies is a necessary step for profitability for the processing sector. Negative margins at the beef plant are evidence of overcapacity. Cattle owners have been the beneficiaries of overcapacity and competition has rewarded cattle owners with extra profits from overpaying for cattle. Packers overpay to fill necessary slaughter slots.
The name of the game is plant utilization. Plants can’t operate efficiently when they are only using 70% of plant optimization. They are obligated by capital investments and union contracts to manage the assets according to strict parameters. Variable cost can be reduced with smaller utilization, but fixed costs must be serviced whether the plant is open or closed. Choosing to close some plants and up utilization in the remaining plants is just good business.
There remains sufficient slaughter capacity for the current supply of fed cattle so do not expect the weekly slaughter to decline. The leverage of the processors will improve and adjusting the weekly slaughter volume to fit current demand for beef and supplies of fed cattle will follow the same process of negotiation between processor and feeder except the processors will hold more cards for control because they have fewer kill slots to fill.
There remain some wildcards in the mix. Still unresolved is a labor dispute in Cargill’s Fort Morgan plant. The target date for opening the under-construction beef plant in Amarillo has not been announced. Like the downsizing of the beef plants, feedyard downsizing is next in line. Many feedyards are operating at low optimization but this only results in continuing overpayment for replacement cattle. The few yards that have closed have been replaced by new pens in other yards and even new feedyards. The next phase of industry downsizing will be feedyards closing.
CARDINAL RULE FOR COMMODITY TRADING
“IF IT IS OBVIOUS, IT HAS GOT TO BE WRONG!”
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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