February 28, 2026
MARKETS
Two days of plummeting futures gave packers the opportunity to bring the cash prices down with the futures. Sales in the north fell as low as $240 leaving weekly sales from $240-5 live –$4-8 lower. Dressed sales were mostly $383-4 — $5 lower. In the south sales were mainly at $244 — also $5 lower.
The northeast is a large population hub and recent weather in that area necessarily impacts food patterns. People tend to shelter in place and more eating occurs at home. The heavy snowfall also creates transportation problems for restocking grocery shelves. It is often difficult to make a linear connection to beef demand or consumption.
The weekly quality grade on all fed cattle was reported this week at 89.4% choice or better — an all time record. The increase in quality grade makes the choice/select spread relegated to equal status to the choice/prime spread. Historic reports have always played choice cuts against select and currently select is downgraded to a small subset of the quality grading system.
This week’s slaughter was 516,000 head — flat with last week and down 25,000 from the previous week’s slaughter volume, and 53,000 under last year. The packers are deploying the only weapon they have to restore margins — sharply downsize the slaughter. The sharp decline for two weeks running will send a jolt through the retail trade and has already set the stage for higher box prices. Margins were deep in the red for the processors but this week made the largest positive contribute to righting the ship this year.
Futures tanked for two days as packers trim the slaughter volumes giving them more leverage in the cash market.
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 952#, 2# lower than the prior week, and 30# 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 .8% from the previous week at 89.4%.
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 transition from a historically soft seasonal period to the spring period that has featured improved demand. Inevitably the higher the price, the increased risks of damage to demand. To date it has been slight but there can come a tipping point and everyone is on the lookout for that point. Beef must suffer a loss of marketshare, not because of price, but simply because we are producing less beef.
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 posted gains for the week as last week’s small slaughter pressured retail interest.
One casualty of the beef marketing efforts has been the highest end products. The Wagu and branded “all natural” specialty items often seen on the meat counter, but always carrying a hefty price tag. These include the USDA Prime cuts and have become more prevalent as quality grade on all cattle continues to break new records. It is not unusual to see packages carrying a discount sticker. They must be sold like all perishables, but unlike most perishables, the consumer experience eating the discounted cuts is not diminished.
Replacement markets
The push in the replacement market is for stockers for summer grass. This has created a two tier market in auction barns around the country. Stocker operators are willing to place heavier and heavier cattle on summer grass. The heavier offerings moving to summer grass will come back to the feedyard as heavier yearlings. The heavier yearlings will produce heavier carcasses and the industry will find out the genetic potential of many of these cattle.
The USDA report indicating 15% more cattle on winter grain fields in Kansas, Oklahoma, and Texas is getting kickback from many operators in those areas. Local cattle owners are reporting less cattle rather than more cattle on wheat and oats. Dry areas like the Texas Panhandle never placed many cattle on wheat, while central and south Texas placements were late and reduced by high prices and limited supplies.
Benchmarking prices for replacement cattle has become a popular pastime. The advances of 40-50% over year ago prices has some operators gasping. A recent video auction brought in some Arkansas calves weighing 320# at $7.25. The dollars per head for some replacement cattle are nearing the price received last year for fed cattle.
The drought monitor is showing some areas of stress. The Texas and Oklahoma Panhandles have been a small local spot failing rain or snow this winter. The dry conditions in the southern plains sets the stage for a high risk for wildfires. Moisture conditions and wild fire possibilities will play into the rebuilding of the nation’s cattle herd.
Compared to last week: Feeder steers and heifers steady to 3.00 lower, 600-700 lb steers 10.00-15.00 higher. Steer calves steady to 5.00 higher. Heifer calves up to 25.00 higher. Demand moderate to good. Bullish Cattle on Feed report last Friday with the lowest on feed number since 2017 and the lowest January placement since 2007. Cattle futures trading all in the red today. Again, reiterating what we have
been saying for a while, numbers remain very tight but other happenings in the industry are weighing the futures markets down. Quality average to attractive. Weather remains extremely dry with another worry of wildfires coming tomorrow. Looks like some wheat cattle are being pulled a little early and at lighter weights. Supply included: 100% Feeder Cattle (59% Steers, 0% Dairy Steers, 39% Heifers, 2% Bulls).
Feeder cattle supply over 600 lbs was 70%
Compared to last week: Steer calves over 500lbs 2.00-7.00 lower, under 500lbs 8.00-12.00 higher. Heifer calves 1.00 to 7.00 higher. Quality and condition average. Demand moderate to good. Warm and dry weather is forecasted for the rest of the week. Supply included: 100% Feeder Cattle (42% Steers, 52% Heifers, 6% Bulls). Feeder cattle supply over 600 lbs was 27%.
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. Soybeans have rallied on the prospect of improving export sales and a end of March meeting between Trump and Xi. The rally pulls acreage from corn to soybeans this spring. Analysts will begin to estimate the number of acres for this year’s corn crop. Most expect a small decline in corn acres. Corn basis levels in Guymon, Oklahoma are at +$.45 — basis the May contract.
TRIM THE SLAUGHTER
Margins at the beef plants were, according to some sources, running $500/head in the red. For a beef plant killing 5000 head a day, that would be $2,500,000 a day – a big number. This is the difficulty that caused the Tyson plant to close and the extreme losses that will cause any business to radically change business operations.
The choices available to the packers are: 1) pare back the slaughter in the existing plants, or 2) close another plant. For now, the first option seems to be the current choice but while four companies control over 80% of the weekly slaughter, there are other independent companies operating in the processing space and one of them could choose to close at any time.
The implications will be felt in two ways. First, the processors will attempt to align slaughter volumes to match fed supply outlook. The downsizing will pressure cash prices as competition for available kill slots declines. Second the consumer will see less beef on the nation’s meat counters and beef will lose marketshare to the other proteins as price points consumers in the direction of alternatives.
The longer-term changes will be adjustments to the beef supply chain allowing free markets to operate and each segment makes the necessary adjustments to meet a downsized national cattle herd in the process of rebuilding. This can’t happen without financial pain. Processing and feeding facilities will continue to downsize until they are able to match the current herd size then rebuilding can begin.
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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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