March 31, 2026
MARKETS
Show lists declined in all regions. The small slaughter volume accompanied by smaller show lists presents a conflict with estimates of marketing numbers garnered from government cattle on feed numbers. The cattle markets are beginning to uncouple from the war news. Cattle owners will want to extend last week’s surge in cash and futures prices into this week. The post Easter period is historically a good period for beef demand. While the processors suffered a margin decline last week, the bottom line still is positive and beef plants will want to stay active.
Cash sales for last week moved higher on Friday. Sales for the week featured live sales in the north from $235 Thursday to $240 late Friday. Most dressed sales were at $372. In the south cattle traded Friday evening for $238 with a few low end cattle on Thursday at $234.
Extreme heat moved into the western and central part of the U.S. followed by a cold front leaving crazy fluctuations from day to day. Heat and wind bring wildfire and have already delivered destructive fires to the plains. In Nebraska the damage extended to loss of livestock.
This past week’s slaughter was 520,000 head — 17,000 over the previous week, and a whopping 89,000 under last year. The slaughter comparison reached a record spread year to year and brings into question some data regarding the on feed numbers. During this past week, choice cuts went discount to select cuts making it difficult for beef producers to earn premiums on high grading cattle.
The futures followed through on Friday’s surge.
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 966#, 7# higher than the prior week, and 47# 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 unchanged from the previous week at 89.7%. 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 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. Demand normally improves following Easter. The high price of beef is always a threat or risk 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 were higher to open the week. Short bought retailers will depend on more product coming from the beef plants this week.
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
As we move into April, many areas are reporting hot dry weather that is forcing the remaining cattle on wheat fields to market. High prices and weather stressed grazing locations set the stage for movements. These cattle are moving into a marketplace hot for replacement numbers as empty pens occupy a large portion of the plains. Many of the Colorado feedlots are opting to not replace empty pens and are awaiting a resolution of the JBS Greeley strike.
Modeling the breakevens for current purchases is enough to stress the most calm and rational of lenders but large negative margins at the feedlot level are foretelling trouble in the feeding sector. On any given turn of inventory, the negative margins at purchase might survive the loss by future cash increases far beyond current estimates. Eventually those margins will turn into losses and at the extremes, current estimated losses will become magnified by a cash market that turns sharply lower instead of higher in the future marketing periods. Could a feedlot animal lose $1000/head?
The drought monitor is showing some areas of stress. The Texas and Oklahoma Panhandles and western Kansas are dry and hot. The dry conditions in the southern plains sets the stage for a high risk for wildfires. Nebraska has suffered wildfire losses of the magnitude of several hundred thousand acres. 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 4.00-8.00 higher. Steer and heifer calves mostly steady. Several feeders off winter pasture available. Demand very good. Several mentions of cattle being here because the wheat has played out due to lack of rain. Some wheat in Southwestern Oklahoma has been reported only about 3 inches tall and already heading out. Quality average to attractive. Rain is in the
forecast for the week but much of it looks to be in Eastern Oklahoma. Grass accounts have practically dried up. Supply included: 100% Feeder Cattle (58% Steers, 41% Heifers, 1% Bulls). Feeder cattle supply over 600 lbs was 76%
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 lost ground in early week trading. For the most part corn has been stable this year with small fluctuations in price or basis. The length of the border closing for cattle from Mexico has created a newly developed finishing industry in Mexico and new demand for American corn to feed those cattle. Most analysts expect a decline in corn acres. Corn basis levels in Guymon, Oklahoma are at +$.55 — basis the May contract.
A NECESSARY OVERHAUL
Questions about USDA data and reporting are not new and any knowledgeable person familiar with the processes involved in data collection and reporting would probably chuck the whole system and start over. Chances are good, the government has overstated the number of cattle on feed. Marketing numbers are rock solid because they are collected from slaughter plants that must have government inspectors leaving little room for error. This leaves placements as the culprit and these numbers are acquired by phone calls and mail out surveys with no way to verify the data. This past week slaughter was 89,000 under last year, a number that would be hard to justify from government on feed numbers.
The growth of beef on dairy calves has been rapid and dairy heifer placements have likely distorted the numbers used to determine the bottom of the cattle cycle and beginning of herd rebuilding. USDA reports have not shown the decline in heifer placements that previous cattle cycles demonstrated as occurring near the bottom. It is likely herd rebuilding has occurred faster than most believe, and common sense tells us these price signals from calves are sufficient to stimulate rapid growth.
The understating of the cattle on feed numbers has been directly responsible for another critical flaw in USDA mandatory price reporting. As numbers of cattle on feed declined, the committed formula and grid cattle have become a larger percentage of total fed cattle slaughter. This has left a much smaller pool of fed cattle available for trading in the cash markets. Since this pool sets the base price for the bulk of the weekly slaughter, accurate reporting of the cash markets is critical to the integrity of the beef industry price structure. The current system is broken, with Colorado and sometimes Texas markets absent from any reports. The “over the top” transactions are ignored and misclassified leaving the base price to be determined by a woefully inadequate number of transactions.
Artificial intelligence is at the forefront of every business decision. Programming efforts that previously required hundreds of programmers and years of development are now accomplished in days with a few people. It makes good sense to scrap the entire USDA data collection and reporting architecture and modernize the database to meet the needs of today’s agriculture. The excuse of available funding and resource time is no longer valid. Secretary Rollins can be a champion of the ag industry instead of a scapegoat.
USDA CONTACT FOR CORRECTING MANDATORY PRICE REPORTING
mpr.lpgmn@usda.gov
This email address is used for comments for Livestock Mandatory Price Reporting (LMPR). You can also leave a voicemail at 202-720-1990 if needed.
CATTLE REPORT LIBRARY
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NOTE TO READERS
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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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