October 17, 2026
MARKETS
Packer bids in Kansas and Texas of $228 Friday drew only a few limited sales with packers renewing $228 bids Saturday morning. Should no additional cattle trade, the small volume of sales in the south will price hundreds of thousands of cattle. Most cattle in the south are priced at $230. In the north live trade occurred at mainly $226-$227 with dressed prices at $350 to $355. Live prices in the north were $3-4 higher and $2 higher in the south assuming no more trades are reported. Dressed prices were $5-10 higher.
One unique feature of beef demand has been resilience. High prices normally with most products cause buyers to switch to other alternatives, buy cheaper versions of the same product, eat less of the product or stop eating it. Beef demand in large part has survived the price increases of the last two years. That doesn’t mean demand can’t be damaged in the future by price, but it is a reflection of the importance most consumers place on the desirability of the product. Economists would call the demand curve for beef largely inelastic.
This week slaughter volumes was 553,000 head — 18,000 over the previous week and only 13,000 under last year. The larger slaughter reflects improving plant utilitization which translates into better margins for the processors who were forced to raise input cost this past week in the spot cash market. Improved plant utilitzation means a more efficient beef pipeline. The weekly slaughter was the third largest of the year and in terms of fed cattle, the largest of the year as the cow slaughter continues to decline. Processors have maintained profitability since July — the longest period during the past few years. The status for fed supplies will remain tight through year end especially in the south.
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 953#, up 1# from the prior week, and 14# 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 .1% from the previous week at 87.3. The quality grade remains near historic highs as cattle are fed to heavier weights.
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.
Fluctuating commodity prices have always presented a problem for restauranteurs. No restaurant wants to continually re-price items on the menu. Consumers are attentive to price increases and quickly notice upward pricing. Welcome to the world of a workaround. Some restaurants have opted to post a notice in small print at the bottom of a menu informing diners of a special surcharge of xx% added to the bill because of high fuel and labor costs.
The Cutout. The lean beef prices have struggled to hold ground under pressure from the imported beef. This past week’s slaughter volume moved higher as plants improve plant untilization and efficiency. Slaughter volumes will continue to be dictated by processing margins and government intervention.
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
October and November are the largest marketing periods of the year for replacement cattle. Demand for replacements is high and recent rains provided broad coverage of the nation leading to new grazing opportunities for cattle for growing and breeding. The problem simply stated is a shortage of animals to fill those fields of grazing opportunities. Those buyers closely examining the future outcome of today’s purchases, based on deferred cattle futures, will not find financial rewards at the end of the line. Much of the nation’s farm tracts will be left empty of cattle reserving the crop to be harvested for grain.
Weather will always influence the market for replacement cattle. The main grain belt in the southern plains, where many cattle are grazed on winter wheat, has enjoyed generous rains. Most fields have been planted and some have an emerged crop. Warm weather will now be important to plant growth and grazing opportunities. The wildcard for a year that could provide the largest winter grazing in decades is availability of cattle. There simply may not be enough cattle to stock winter grazing sites. Recent rains in the desert southwest has activated hopes for desert grazing and the opening of the border will provide some limited supply of cattle.
Movement from Mexico has featured groups of heavy cattle nearing finish in Mexican feedlots. These cattle will move to U.S. feedyards for a short finishing period before being sold to processors. Very few light Mexican cattle are being offered because of generous rains across Chihuahua and Sonora.
Seasonally health problems, that can occur anytime with the stress of weaning, worsen for unweaned calves during the fall. Many operators have suffered the penalty paid when they buy fresh weaned calves and experience usually large death loss. Not only can death loss percentages jump, but also sick calves present a constant labor requirement and long term performance impairment. A $50 cwt. spread between weaned and unweaned calves is large, but sometimes justified. The spreads between weaned and unweaned calves is widening. Knowing more about the background of new purchases can be helpful including full health records.
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 over 750lbs steady to 3.00 higher, under 750lbs 5.00-10.00 higher. Feeder heifers 2.00-7.00 higher. Steer calves 10.00-20.00 higher. Heifers calves over 500lbs 4.00-8.00 higher, under 500lbs 10.00-20.00 higher. Demand good for all classes of cattle. Quality average. Most feeders were coming off grass and condition was in the buyer’s favor. Buyers reported an increase in orders as wheat has emerged across the trading area, with additional rainfall forecasted throughout the remainder of the week. Supply included: 100%
Feeder Cattle (62% Steers, 31% Heifers, 7% Bulls). Feeder cattle supply over 600 lbs was 65%
Compared to last week: Steer calves 5.00-15.00 higher. Heifer calves 10.00-20.00 higher. Today’s offering included a wide variety of cattle, representing all classes, types, and quality, ranging from plain to attractive. Demand good. The sight of green wheat, coupled with additional rainfall in the forecast has improved optimism among both buyers and farmers across the trading area. Supply included: 100% Feeder Cattle (47% Steers, 43% Heifers, 10% Bulls). Feeder cattle supply over 600 lbs was 29%
Feeder Cattle Cash Index. The index is tracking the moves in cash prices. The Cattle Report has updated index reporting to provide a daily graph showing changes in price of the index.
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 continued to drift lower following the USDA report that increased expected corn yields to 181 bushels and raised the beginning inventory for the 2026/2027 year. The current basis level is near +$1.00 in Guymon, Oklahoma — basis the December contract.
ICE FUTURES CONTRACTS FOR LIVESTOCK
International Exchange’s (ICE) challenge to the well-established CME cattle contracts is no easy task. ICE plans to launch four livestock futures contracts on December 7, 2026, including physically delivered live cattle, financially settled live cattle, feeder cattle, and lean hog futures. All four contracts will initially trade Monday through Friday from 8:30 a.m. to 1:05 p.m. CST, matching CME’s existing trading hours. The launch remains subject to regulatory review and the CME will attempt to make it difficult. The decision to enter livestock markets represents a significant competitive development, particularly as market participants evaluate membership, execution costs, trading technology, liquidity, and clearing. ICE’s initial contracts are designed to compete directly with CME’s established livestock products except they will add a cash settled live cattle contract STK. The physically delivered live cattle contract, trading under the symbol MOO, will represent 40,000 pounds, while the financially settled feeder cattle contract, COW, will represent 50,000 pounds. The financially settled lean hog contract, SOW, will represent 40,000 pounds.
The key to success for any futures contract is liquidity. The volume of order flow to any marketplace defines and stipulates the proper functioning of a market. Without sufficient order flow, bid/ask spreads widen and execution becomes perilous. The two largest classes of participants are the commercials. Processors hedge by establishing long positions while cattle owners hedge with short positions. Speculators come in many forms – index funds protecting inflationary risks, spread operators, managed futures firms, and individual speculators who may take a position from a varied source of analysis. Without liquidity the initiative will fail.
Liquidity is attracted by improvements either to the contract, the execution of orders, or membership and fee structure. The new offering will start with targeting the weaknesses in the CME contract. Physical delivery to antiquated stockyards is a weakness of the CME contract. No speculator wants to wake up to news of delivery of 5 loads of cattle to Clovis, New Mexico. The stress for the cattle, difficulty of delivery specifications, and logic of a delivery is flawed but the large feeding companies believe it produces a bias in favor of the short. This logic fails to recognize the obvious penalty to liquidity because the speculative longs fear a delivery.
Designing an index for live cattle is not easy in a marketplace with dwindling cash transactions. However, the aggregate data produced each week by USDA of all cattle sold makes it possible to create a index measuring all cattle sold cash FOB, grid, formula and dressed. The weekly results must be matched because the largest segment of cattle are sold based on a grid outcome and those transactions lag the cash a week but can be backdated a week to match. This can produce a national index of all cattle sold for a particular week.
ICE certainly satisfies the importance and value of a counterparty to guarantee the money flows. As one of the largest exchanges in the world ICE is owner of the NY Stock Exchange as well as multiple products in commodities space. Same day electronic money transfers assure compliance and financial responsibility. The industry will watch as the ICE Exchange provides more details on this initiative.
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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