August 28, 2026
MARKETS
“If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” Milton Friedman
Early week light sales occurred in eastern Nebraska at $218 live and $345 dressed. Higher bids of $220 at mid week failed to attract more cattle leaving the conclusion of this week’s purchases for today. Some additional sales occurred Friday in the north at $220-$222 and a negotiated grid sale in Texas at $223. Light sales in the south occurred at $222. Weakest sales were in Iowa.
Meetings are occurring in public forums and behind closed doors to discuss alternative market reporting methods. USDA has refused to modify mandatory price reporting and the engine for transparent price reporting is currently useless. Three of the five major feeding areas are not currently reported.
This past week’s slaughter was an estimated 543,000 head — 19,000 over the previous week and 25,000 under last year. This past week the slaughter volume increased as packers took the opportunity to make hay while the sun shines. Profits have returned to the packers helped by a reduction in slaughter capacities, demoralized sellers, and firm demand for beef. Total beef production for the week remains under last year. The sharp increase in slaughter volume combined with the end of Labor day buying, sent the choice boxes lower at week’s end. The status for fed supplies will remain tight through year end and the industry will be watching how the plant closings and beef imports change the leverage between processor and feeder.
Futures are not yet ready to post a dead cat bounce.
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 947#, 4# higher than the prior week, and 27# 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 86.3%. The quality grade has begun to increase and 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. Box prices were softer. This past week’s large slaughter volume weighed on the market at week’s end. Box prices remain under prior year. Slaughter volumes will continue to be dictated by processing margins.
It is important to remember that spot box prices are much like spot cash prices for live cattle. Most boxes are sold under formulas and do not always have the same fluctuations as the spot market.
Replacement markets
Major adjustments are in the cards for replacement cost. Heat, rising grain prices, and falling fed cattle prices are setting the stage for major declines in the replacement market. Already sellers are finding little to no response for bids from buyers. 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.
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: Feeder steers 4.00-10.00 lower, instance to 15.00 lower over 900 lbs. Feeder heifers 2.00-8.00 lower. Steer and heifer calves 5.00-15.00 lower. Demand moderate as buyers a little more selective for kind and condition. Cattle futures opened mostly in the green, only to close sharply lower. This following a fairly bullish Cattle on Feed report showing the lowest placements and marketing for the month of July since the series began. Quality average. Hot dry conditions continue for the western half of the state, while the eastern half enjoyed rains and some not so hot temperatures. Mid week temps expected to drop just below the 100 degree mark with some slight chances of rain. Supply included: 100% Feeder Cattle (66% Steers, 31% Heifers, 3% Bulls). Feeder cattle supply over 600 lbs was 77%
Compared to last week: Steer and heifer calves 20.00-30.00 lower. All classes of cattle had very few friends today. CME feeder cattle contracts for all months in 2027 are now trading below 3.00. Lack of grass and available pond water continue to weigh heavily on demand, leaving producers across the trading area with little interest in buying cattle at this time. Quality did play a role, also, as most cattle were plain. Supply included: 100% Feeder Cattle (43% Steers, 45% Heifers, 12% Bulls). Feeder cattle supply over 600 lbs was 19%.
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. Runaway corn prices have moved corn from a very stable $4.25 to $4.75 for most of this year to the current jump of well over $5 in all months. The Pro Farmer crop tour estimated the U.S. corn crop at 15.344 billion bushels, with an average yield of 173.2 bushel/acre vs the USDA’s August Crop Production estimate of 16.013 billion bushels and a yield of 180.7 bu/acre. Severe heat has damaged much of the crop in the south plains. The corn basis moved to the December contract. Corn basis levels are moving higher and in Guymon, Oklahoma are at +$1.15 — basis the December contract.
NEGATIVE FACTORS CONVERGE ON BEEF PRICES
Fed cattle prices have declined in a month from $260, near a breakeven for many cattle, to the current $220 price. $40 cwt. translates to $600/head on a 1500# steer. Even the most naïve cattle owner knows prices for any commodity don’t go up forever. Prices are market signals to produce more. Beef producers do have the expectation that market moves are the result of fundamentals.
The negatives that descended on the market were many and from varied sources.
- Severe heat across the plains. Heat stresses cattle and diminishes consumer demand for beef.
- Reopening the Mexican border. New supplies of replacement cattle will begin to arrive starting this past week and continuing port by port this year.
- Plant closing and restructuring. This was not unexpected and is part of necessary downsizing of the nation’s processing facilities.
- Trump’s beef import announcement. Government manipulation and interference in markets is always bad.
- Sharply rising grain prices. Corn crop estimates have fallen and prices have moved sharply higher.
- Rising interest rates. A 40 trillion dollar national debt and control on inflation are sending interest rates higher rather than lower. The market is anticipating two increases this year.
The administration mobilized to counter criticism from the public and media regarding the announcement of beef imports. Trump gave Glenn Beck an interview during which he blamed the fall in cattle prices on the big 4 packers. He promised less regulation on processors and grants to small processors to create more competition. This is a failed strategy on all fronts. Small processors cannot compete with the large megaplants in processing costs. Grants are just throwing money away. Innovation in processing beef is the only pathway to more competition as IBP demonstrated in the 1960s.
The irony of the decline in the cattle prices is the beneficiary is not the American consumer but the processors who have suffered hundreds of millions in losses. Beef plant margins have moved from negative $200-$300/head to positive $200. Fed cattle prices have declined this past month while box prices have rallied until this past week. Meanwhile the U.S. consumers are asked to eat meat from Namibia.
CARDINAL RULE FOR COMMODITY TRADING
“IF IT IS OBVIOUS, IT HAS GOT TO BE WRONG!”
CATTLE REPORT LIBRARY
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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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