December 12, 2025

THE MARKETS

Wrapup trade took place Thursday at $230 live in both north and south and $355 dressed in the north. Early week sales at $228 in the north turned into $230 in all areas. Prices were $5 higher live and $10 higher dressed. USDA still has not submitted any plans to correct the lapse of market reporting.

Cold temperatures continue in the north, midwest and east, but a warming trend is spreading across the country from the west. Some gains have slowed in the nation’s feedlots and carcass weights appear to have peaked. As snow covered pens in the north warm and frozen ground turns to mud, those weight could continue to decline.

The ramped up slaughter of this week was a quick response to hefty margins at the beef plants. This past week’s slaughter at 600,000 head was up 102,000 from the previous week and only 14,000 under last year. This is the largest slaughter volume in months and will likely be repeated next week followed by two holiday shortened weeks. Packer margins dwindled this week as input cost jumped higher and box prices softened.

CATTLE FUTURES

Futures jumped higher as cash prices led futures upward. Slaughter is expected to be large this week and next and then fall for two holiday shortened weeks. Recent gains have been concentrated in the front end of the contracts with the deferred contracts lagging. Some cattle owners in the north tendered deliveries in Nebraska and that new prevented longs from entering the spot contract. The cost and stress caused by deliveries is especially exaggerated in the winter.

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 957#, 3# lower than the prior week, and 41# 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 down 1.6% from the previous week at 84.8% .

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. The problem that will slow forward contracting is the heavy discount held by the deferred live cattle 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 Feature Activity Index.

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.

There are some changes apparent in supermarket marketing plans for beef. Some have to do with price and others related to the increasing weight of the carcasses. More of the carcass is dedicated to the grind and retailers are packaging larger packages of ground beef to encourage larger dollar purchases. They also are offering more blend ratios. On the middle meats some of the steaks are changing how they are presented to the consumner. Many of the ribeyes have the lip trimmed because if it is included, the cut is too large.

The Cutout. Box prices drifted lower but demand remains good for the holiday period as retailers anticipate consumer interest. The supply of beef is being carefully managed by the processors. Because of improved quality grade, more prime cuts will be on the shelf this holiday season.

Replacement markets

Feeder futures have failed to dampen the enthusiasm for light calf purchases. Declines in the feeder cattle futures is largely ignored by buyres anxious to acquire inventory before year end. Hopes for a positive outcome of ownership of new purchases is not bright as deferred futures point to red ink. There is little evidence of reaching or passing the low point in replacement numbers. There is a desparation driving new purchases of owning inventory at any price.

Occupancy levels are falling in all regions but especially in Texas. The purchase of a 800# steer on today’s market given today’s feed cost would result in a $250 loss if the animals were hedged. Some operators would prefer to look at an empty pen. Some bankers would agree. Those who do choose to place cattle on feed, must gamble with equity on a rise in prices by next year when the cattle will sell.

The drought monitor continues to favor herd expansion. Some dryness has developed in the southern plains. Chances are good that the slow rebuilding of the nation’s cattle herd is now morphing into full throttle rebuilding and those forecasting recovery several years away will find it happening sooner rather than later.

Oklahoma City. —

Compared to last week: Feeder steers over 800lbs 6.00-10.00 higher, under 800lbs 15.00-30.00 higher. Feeder heifers 6.00-10.00 higher. Steer and heifer calves 15.00-30.00 higher with spots up to 40.00 higher. Demand very good for all classes of cattle. Quality average. CME futures are trading in the red today, but have done little to slow down the aggressive bidding from buyers. Tomorrow starts a warm up from
the winter temperatures for the trading area. Supply included: 100% Feeder Cattle (64% Steers, 33% Heifers, 3% Bulls, 0% Beef/Dairy Steers). Feeder cattle supply over 600 lbs was 55%

OKC West 

Compared to last week: Steer calves over 500lbs 8.00-18.00 higher, under 500lbs 15.00-25.00 higher. Heifer calves 4.00-8.00 higher. Demand very good. Supply included: 100% Feeder Cattle (48% Steers, 43% Heifers, 8% Bulls). Feeder cattle supply over 600 lbs was 30%

Feeder Cattle Futures. Futures prices moved higher.

The lack of liquidity in the feeder contract provides a perfect environment for prices to move too far in either direction. Poor liquidity leads to extreme volatility. Overdone directional price movements frequently require corrections and traders sense the vulnerability of the contract that needs to be cash settled but the contract index needs a redo.

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 declined. Elevators are moving basis quotes to the March contract. Corn basis levels in Guymon, Oklahoma are at +$.50 — basis the March contract.

THE USELESSNESS OF MANDATORY PRICE REPORTING

The intent of the Mandatory Price Reporting law was simple and clear. It is designed to provide beef producers, packers and the industry with a daily, weekly, and monthly recap of prices for cattle at various stages of the marketing chain. The law, passed by Congress, promised transparency and timely reporting so all producers could make informed marketing decisions. The law assigned to government bureaucrats the task of drafting the regulations to deliver the intent of the law.

The basic reporting requirements have changed little in the 25 years since USDA began reporting. The packers are compelled to report all transactions within 30 minutes to include price, volume, location, and type of purchase — such as live, FOB, dressed, formula or grid. The regulations protected packers in certain regions from reporting because to do so would compromise confidential information. USDA drafted a ridiculous rule providing protection if one of the following occurred:

  • At least three reporting entities need to provide data at least 50 percent of the time over the most recent 60 day time period.
  • No single reporting entity may provide more than 70 percent of the data for a report over the most recent 60 day time period.
  • No single reporting entity may be the sole reporting entity for an individual report more than 20 percent of the time over the most recent 60 day time period.

The result is no reporting today in Colorado or Texas.

The failure of USDA bureaucrats to change with the times has rendered the reports almost meaningless. The only changes have been the excuses for not changing. The few changes, over the 25 years, have been additions to the reporting and some of those are well intended, but today MPR needs to undergo a complete makeover. The complaints about proper reporting have always been answered by blaming inadequate funding, lack of Congressional direction, mixed opinions coming from industry sources and/or lack of programming staff. These are all subterfuges, deployed to duck the realities of today’s marketplace. Today, using proper database management, and AI, the entire reporting could be revised in one week’s time.

Critical to a newly designed and effective reporting should be the following:

  • All transactions deliverable within two weeks should be reported as spot cash prices and should be converted to FOB live prices at the feedyards. Standard freight rates could easily be applied using GPS coordinates for the source and destination of the transaction (feedyard and beef plant)
  • All spot transactions should be divided into the following types.
    • Cash FOB
    • Cash delivered
    • Grid FOB
    • Grid delivered with the final price reported one week late with the carcass yield and freight adjustments applied to the live FOB feedyard price.
    • Formula with the base price for the formula reported on the Monday following the trade week, and the final live FOB prices delayed one week following the application of carcass premiums and discounts.
    • “Over the tops” reported in the Monday wrap up following the trade week.
  • All forward contracts should be reported according to the following types:
    • Fixed — Cash FOB with the delivery period.
    • Basis for both formula and cash with the basis month, basis level, and delivery terms.
    • The region in which the transaction occurred.
  • Reporting regions:
    • Nebraska and South Dakota
    • Kansas
    • Texas
    • Northwest – Idaho, Washington, Oregon
    • West – California and Arizona
    • Midwest – Iowa, Minnesota, Michigan, Illinois

mpr.lpgmn@usda.gov

This email address is used for comments for Livestock Mandatory Price Reporting (LMPR) and the Cattle Contract Library. You can also leave a voicemail at 202-720-1990 if needed. Make sure to have your establishment number available when reaching out. [mpr.ams.usda.gov]

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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