June 3, 2026
MARKETS
News of a screwworm case in south Texas rattled the markets. Whether the case is confirmed or only rumored does not seem to matter. It is likely a case will be found and confirmed whether in cattle or other animals including wild animals that cross the border. This animal health issue is unlikely to move the beef markets except to delay border openings with Mexico. Light trade occurred in Texas earlier at $255 or $2 lower than last week but this morning bids of $256 have been passed and several grid base prices negotiated at $257. This morning a few sales in the north were at $405 dressed, but live bids of $256 have been passed.
This past week’s slaughter was 448,000 head — 84,000 under the previous week because of the holiday, and 40,000 under last year. The struggle with negative margins at the beef plants is creating a operating environment that is not sustainable. As fed prices have declined, those negative margins are likely to spread to the feeding sector. Retailers are hestitant to sell beef at a loss so features are increasing for other meats during a period when beef sales should rally. The backdrop for fed supplies will remain tight and cattle owners will hold some leverage as the industry transitions to increasing calf supplies in the coming year.
The delivery month of June should bring a convergence of futures contracts to the cash market, but instead futures are pushed south driven by screwworm news.
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 955#, 2# higher than the prior week, and 40# 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 up .5% 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 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.
Beef demand will now move into summer periods that have historically been favorable periods for beef consumption. 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 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 firmed in early week trading. Some expectations are for improvement in the middle meats following Memorial day and more cookout interest in steaks for Father’s day and the 4th of July. Slaughter volumes will continue to be dictated by processing margins. The normal seasonal pattern of increasing spreads in the quality grades may not develop this year with the abundance of high grading cattle.
Replacement markets
Spring rains enable pasture conditions to accommodate summer grazing programs and sustain year round breeding. Rains across many of the dry and burned areas are reviving forage. At the same time a new pessimism is creeping into the market and stocker and feeder prices are moving sharply lower. The realignment has done little to improve feeding margins that will eventually close some feeding facilities as the processing plants have declined.
Many cattle moved early off winter grain fields in April as reported in the monthly COF report. Movement and placements are slowing in May and will likely continue the year on year declines. Placement of cattle on feed this summer will largely be at the mercy of Mother Nature. Placements of cattle on feed from beef breeds continues to show heavier placement weights tracking the same pattern for finished cattle.
Many placement reports fail to separate beef breeds from beef on dairy breeds in reporting placement numbers. The popularity of the beef on dairy cattle is beginning to comprise a larger percent of feedyard occupancy especially in Kansas and Texas. Beef on dairy crosses are placed at lighter weights than beef bred yearlings. USDA has failed to separate placements by breed that has distorted the ability of the industry to judge the numbers of beef heifers held back from feedyard placement for breeding.
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 the last test two weeks ago: Feeder steers and heifers 5.00-15.00 lower, instance to 20.00 lower. Steer and heifer calves 10.00 20.00 lower. Demand is moderate. The continued extreme ups and downs in the cattle futures is reducing demand for feeder cattle despite it trading well into the green today. Slaughter cattle prices fell last week as cattle futures cratered. Beef prices traded on both sides but steady to strong for the week. High heat and humidity, along with many farmers in the field cutting wheat has limited the demand for calves. Several un-weaned calves included. Quality mostly average. Supply included: 100% Feeder Cattle (63% Steers, 0% Dairy Steers, 35% Heifers, 2% Bulls). Feeder cattle supply over 600 lbs was 68%
Compared to last week: Steer and heifer calves 10.00-20.00 lower compared to the light test of last week. Yesterday marked the first truly hot and humid day across the trading area, and, as expected, the bulk of today’s supply consisted of cattle still carrying fescue hair. CME futures traded lower, across the board, today. Rain chances start tomorrow and are forecasted for the rest of the week. Supply included: 100%
Feeder Cattle (49% Steers, 46% Heifers, 5% Bulls). Feeder cattle supply over 600 lbs was 21%
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 were soft. Some believe the basis will adjust downward with the decline in oil prices but grain basis levels have moved higher driven by increasing transportation costs. The competition for the last mile trucks has increased from demand for gravel for the nation’s many data centers. Corn basis levels in Guymon, Oklahoma are at +$1.00 — basis the July contract.
TWEAKING THE GRID
Garrison Keillor reminded us that in Lake Wobegon, his fictional village, all the kids were a little above average. Cattle owners need to feel good about marketing their cattle and nothing serves that purpose more than beating the benchmark. Forget that the benchmark is often poorly defined, but striving for premiums has pushed many cattle marketing plans to a grid where premiums and discounts are based on carcass characteristics.
Grid selling is undergoing many changes. Traditional premiums were earned with quality grades that exceeded the plant averages. Producers with strong genetics could add hefty dollars to their payout when the choice and prime cattle in their pen jumped ahead of the plant averages and the prime/choice/select spreads rewarded them for strong genetic makeup of their cattle. The problem in the past few months is heavier out weights are producing an excess of choice and prime cattle — narrowing or eliminating the premiums for high quality cattle. Select has gone premium to choice at times.
Joining the change in quality grading is an increase in YG 4&5s — a cutability penalty assigned to carcasses with excess fat. A year ago, the national averages were 15% YG 4s and 5% YG 5s and this year 25% YG 4s and 6% YG 5s. Many of this year’s harvested animals are receiving large penalties for excessive YG 4&5s. Cargill published great research studies 30 years ago detailing the red meat cutout improvement from Continental breeds like Charolais. You may begin to see some breeders jumping on this bandwagon to get the best of all possible worlds – high grade accompanied by great cutability.
The eternal search for the perfect animal for beef is never ending. The transcendent animal should navigate any grid with superior results. The quintessence selection varies among breeders and experts and countries. In the U.S. a popular option would be a Charolais Angus cross and in Australia the Murray Gray. More adventuresome options would include the Belgium Blue known for being double muscled and producing tender meat without marbling.
MANDATORY PRICE REPORTING
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CATTLE REPORT LIBRARY
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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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