July 18, 2025
THE MARKETS
Packers added inventory at the top end of last week’s trading ranges then were forced to inch prices up $1 higher to acquire more cattle for next week’s slaughter needs. Sales in the south were at $230 moving up to $231 in Kansas late yesterday. In the north prices were mostly $240 live. Most dressed sales were $378 to mostly $380.
This past week’s slaughter at 568,000 head was 94,000 over last week holiday shortened slaughter. It was 37,000 under last year. Box price fell as expected following the holiday and live prices rose taking back margins gained in the previous two weeks by the processors.
CATTLE FUTURES. Futures softened as traders awaited more news from cash markets. Uncertainty, created by a volatile political and economic environment, allows the slightest rumor on tariffs, plant closings, or immigration to send futures prices up or down. Someone with perfect timing or a crystal ball can have a hayday.
The discount in the deferred contracts is pricing in a plant closure. No one knows what plant will close, or the size of the plant, or when it will close. When a plant does close, it will allow packers to reduce the red ink that has been spilling most of this year. Live cattle operators will lose some of the benefit of too much processing capacity and the losses at the plants that subsidized gains in margin at the feedlot level.
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 910# up 3# from prior week and 21# 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 .6% lower from the previous week at 82.9% . The current grading hovers 1% over last year after recently reaching an all time high this year.
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.
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 is coming mostly from the grind that represents almost half of all beef sold. Published reports show hamburger to be not only the most popular item on the meat counter but also the fastest growing. Winter weather pushes consumers to end meats and roasts and historically a spring warm up triggers demand for the middle meats and cook outs. The daily fluctuations of the primals represents seasonal changes and consumer preferences caused by pricing.
The Cutout. Boxes were mixed as beef cuts find some support. The mainstay of support continues to be the grind.
Replacement markets
The stubbornness of the markets to observe caution at record breaking prices, has been the hallmark of recent market reports. The elevated risk profile of current purchases presents a challenge not seen in recent history. Faith that somehow the market will bail out breakevens topping $220 seem unrealistic. This projection assumes the beef processors will continue to compete for cattle with some losing as much as $300/head. The pool of replacement cattle continues to dwindle but the show must go on.
The current private treaty contracts for replacement cattle are understating the slide penalties. An examination of the latest Oklahoma City transactions shows 800# steers sliding at 18 cents per hundred weight instead of more common 12-15 cents used on many contracts. The same market shows 50 cent slide on 500# cattle far higher than 25# slides used in many contracts.
Modeling the purchase of light cattle for a grazing program has taken a new twist. Most operations, whether leased or owned, assume a grazing fee per month or per pound gained. Putting the numbers together for a grazing profile returns losses even if the grazing is for free. How many people would choose to graze if someone gave you the pasture for free and you still lose? This means in a year of abundant forage some pastures will remain empty and others will fill with breeding stock.
The drought monitor continues to favor herd expansion. Only the desert southwest remains in drought. April/May/June rains have been generous across the plains. Following the cool rainy weather will be summer heat and wind. Chances are good that the slow rebuilding of the nation’s cattle herd is now morphing into full throttle rebuilding and those forecasting recovery several years away will find it happening sooner rather than later.
Compared to the last sale two weeks ago: Feeder steers 10.00-20.00 higher, 800-950 lbs lightly tested and steady to 5.00 higher. Steer calves 15.00-25.00 higher. Feeder heifers and heifer calves 10.00-25.00 higher. Demand extremely good with active trade as buyers completely disregard the sharply lower cattle futures. Rains fell again this past weekend, keeping summer pastures green. Quality mostly average. Supply included: 100% Feeder Cattle (57% Steers, 37% Heifers, 6% Bulls). Feeder cattle supply over 600 lbs was 68%.
Compared to last week: Steer calves 6.00-10.00 higher. Heifer calves 4.00-9.00 higher. Quality average with a few fancy drafts. Demand very good with pastures still green and thriving. Summer has arrived with temperatures heating up everyday for the next week. Supply included: 100% Feeder Cattle (43% Steers, 44% Heifers, 12% Bulls). Feeder cattle supply over 600 lbs was 25%.
Feeder Cattle Futures. Feeder futures were mixed with modest support in the back months.
The lack of liquidity in the feeder contract provides a perfect environment for prices to move too far in either direction. Poor liquidity leads to extreme volatility. Overdone directional price movements frequently require corrections and traders sense the vulnerability of the contract that needs to be cash settled but the contract index needs a redo.
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.
National Weekly Feeder Summary released on Friday of each week tracks the national prices by region for last week.
Grain Futures. Corn and wheat moved higher in overnight trading. The recent USDA report lowered ending stocks and raised exports for this year. It also failed to raise crop yield — a questionable call considering the favorable state of this this year’s crop. Corn basis levels in Guymon, Oklahoma are at $.90 — basis the September contract.
PICKING THE TOP
The list of names of market analysts who have called the market top this year is growing. A couple forecasters, who want to curry the favor of producers, have commented that the market won’t peak until fed cattle hit $300 live. The obvious fact is no one knows when it will peak and what the peak price will be. That information is only available in the rear view mirror.
We are in the rebuilding phase of the market cycle and there will come a point when we will witness the highest price paid for this period in time. Because we are in the rebuilding process, we can safely assume that there will not be an increase in fed supplies in the immediate future. We may find shorter supplies does not necessarily translate into higher prices.
What we don’t know is the future of processing capacities. The prices paid for today’s fed cattle are heavily subsidized by the beef packers. They are unable to pass along increased input cost to the retail trade. Losses at the beef plants will not continue forever. Someone will fall out and when and where will determine the moving forward competition status for fed supplies.
What we also don’t know is the consumer resistance point for high beef prices. There will come a time when the packers will be able to pass the true cost of fed cattle along to the retail trade. Box prices headed back down this past week while fed prices shot higher. This will end at some point and retailers will test the consumer’s appetite for the most recent high prices. In the final analysis, most producers will be moving forward in darkness with no light at the end of the tunnel.
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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