February 3, 2026
MARKETS
Show lists were down in all areas this week. This is surprising given the last two weeks of 530,000 head slaughter — a drop of 20,000 following the Tyson plant closing. The lower slaughter did stimulate box prices and they moved higher to start the week. Cattle futures ignored the broad commodity decline in most products and moved higher following the cattle inventory that indicated the rebuilding remains short of market expectations.
The reduced slaughter capacity is running head to head with reduced fed supplies. Some limited trade was reported in Kansas and Texas at $238 live, quickly turning to mainly $240 with outside tops of $241. Northern live prices ranged from $238-$241 with dressed prices from $375 to mostly $377. Prices were generally $5 higher.
This past week’s slaughter of 529,000 head was down 6,000 from the previous week’s slaughter volume, but also 73,000 under last year. Weather caused several shifts in the beef plants to be cancelled along with the Tyson plant closing and the weekly slaughter sharply reduced. Grading of cattle above the choice grade topped all time records. The slaughter is likely to remain near the current range for the coming weeks as packers adjust to a plant closing and new adjusted slaughter rates in the remaining plants.
Futures traders expressed confidence in the market moving forward. Basis levels are extremely erratic and vary from week to week as leadership in the market switches back and forth between cash and futures.
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 960#, 3# higher than the prior week, and 43# heavier than last year. The carcass weight is 80+ pounds over two years ago. 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 .6% from the previous week at 87.7% — another all time record.
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 volatility in futures prices has caused more interest from cattle owners in forward contracting. During the past two to three years, fewer cattle have been forward sold as most producers anticipate higher prices in the future months. Some owners now are willing to set the price for future deliveries with basis levels to the futures varying by region. Large discounts in the deferred month usually discourages forward contracting.
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.
If beef demand should improve heading towards Christmas, the middle meats should provide support for the cutout. USDA Prime cuts are carving out a larger slice of the grocery offerings. Holidays provide an opportunity for many families to spurge on food purchases. 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 turned higher to open the week. It is always difficult to measure weather impacts on food consumption. Buying patterns vary by area and severity of cold, snow, and ice. Power outages also complicate cooking methods.
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 heafty 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 feeder market is remaining competitively priced as buyers struggle with limited numbers of cattle and find those offered are in strong hands and considered overpriced. Even the most inexperienced buyers of cattle are worried they are paying too much. Placement numbers recovered somewhat in December but will be trending lower most of this year. Hopes for a positive outcome from ownership of new purchases are not high and most operations want to stay in the market but know they are overpaying for cattle. There is a new desperation driving new purchases of owning inventory at any price.
The dairy segment of the beef industry is in a liquidation mode following drops in cheese, milk, and butter prices. More dairy cows can be expected in this year’s slaughter numbers. Helpful to many dairy operations are the prices of day old beef dairy cross calves that have become a popular feature in marketplace.
The movements of cattle in January will be storm influenced. Almost two thirds of the country suffered through the coldest temperatures in a decade. The final results will await the monthly COF report for January that won’t be available until late February.
The drought monitor is showing some areas of stress. Some dryness has developed in the southern plains. Moisture conditions and wild fire possibilities will play into the rebuilding of the nation’s cattle herd. If the plains is blessing with timely spring rains, the increase in cattle numbers will happen sooner rather than later.
Compared to the last sale two weeks ago: All classes lightly tested. Feeder steers 4.00-12.00 higher. Feeder heifers 3.00-8.00 higher. Steer and heifer calves mostly steady. Demand was very good with several buyers present, even with a light run. Quality average to attractive. Quite a bit of snow remains on the ground, but the big thaw is on. Temperatures are expected to run warmer than normal for the next 10
days or so. Quality average to attractive. Supply included: 100% Feeder Cattle (58% Steers, 41% Heifers, 1% Bulls). Feeder cattle supply over 600 lbs was 64%
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 are lower to open the week. Corn basis levels in Guymon, Oklahoma are at +$.50 — basis the March contract.
ALL CATTLE INVENTORY AS OF JANUARY 1
Cattle and calves, 86.2 million head, down slightly.
- Cows and heifers that have calved, 37.2 million, down slightly.
- Beef cows, 27.6 million, down 1%.
- Dairy cows, 9.57 million, up 2%.
- Heifers 500 pounds and over, 18.0 million, down 1%.
- Beef replacement heifers, 4.71 million, up 1%
- Dairy replacement heifers, 3.90 million, down slightly.
- Other heifers, 9.40 million, down 2%.
- Steers 500 pounds and over, 15.6 million, down 1%.
- Bulls 500 pounds and over, 2.01 million, up slightly.
- Calves under 500 pounds, 13.3 million, down slightly.
- 2025 calf crop, 32.9 million, down 2% from 2024.
- Cattle on small grains pasture in Kansas, Oklahoma and Texas, 1.73 million, up 12%.
If the numbers released by USDA are to be believed, the rebuilding of the U.S. cow herd is barely beginning and increases in supplies of replacement cattle remains in the future. The difficulty of an accurate number of cattle is always questionable given the methodology used to gather the data, but the facts as reported showed the lowest total cattle numbers since 1951 and lowest beef cow numbers since 1961.
The surprise in the report was the beef cow number decline. This past year reported a surprisingly low cow slaughter. This led many to believe producers were holding back cows for one more calf and not culling as deeply as usual given the high prices for calves. The dairy cow herd was up 2% but culling will be heavier this year as milk and cheese prices decline.
The calf crop for 2025 was the lowest since 2018 and will likely be the low point in this cycle but this year’s inventory will deliver a slowed rebuilding of the supply of calves. The supply of replacement cattle on small grain pastures was a surprisingly large 12% higher. Some will question this number given the some of the dry areas in the wheat belt. The larger than expected inventory of replacement cattle outside feedlots was also difficult to understand given the reduction in Mexican cattle due to the border closing. Governor Abbott issued a disaster declaration this week intended to prevent the spread of the screwworm into Texas, but the likely impact will be a delay in re-opening the border.
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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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