September 12, 2026
MARKETS
Late day trade developed in all areas with uncertain volumes or prices. Most of the earlier live trades on Friday in the south were at $225 with northern sales from $223-$225. Dressed sales were mainly at $350 but some up to $355. Some negotiations continued late Friday and may roll over to Saturday. Just before dark, packers raised bids to $226 in the south buying a few more cattle.
Two negatives were in the news this past week. Deisel prices reach a multi-year high of $6.00 nationwide. The federal reserve will meet this coming week and experts give a 90% chance of an interest rate hike. The same experts expect another rise in interest rates before year end. Financing a high priced cattle inventory is getting expensive.
This week’s holiday shortened slaughter was an estimated 505,000 head — 21,000 under the previous week and 68,000 under last year’s full week. This past week the slaughter volume exceeded most estimates as packers rush to capitalize on recent positive margins. Profits have returned to the packers and they are hoping for a continuation rather than a brief repite. Total beef production for the week remains under last year. The status for fed supplies will remain tight through year end and the industry will be watching how the plant closings and beef imports change the leverage between processor and feeder.
Futures moved higher in anticipation of higher cash prices.
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 949#, 4# higher than the prior week, and 23# 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 .7% from the previous week at 86.9%. 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.
Retailers will be looking beyond the summer heat. Improved demand should be expected as summer temperatures segue into cooler daily highs. Lower box prices converted to lower prices for individually priced portions on supermarket shelves, will catch the eye of price weary consumers. With the grind dominating beef sales, imports will continue to rise and those lean cuts will be blended with excess fat from the beef plants.
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 can 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 lost ground towards week’s end. Box prices remain under prior year. Slaughter volumes will continue to be dictated by processing margins.
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
Finally summer heat is transitioning into fall’s more moderate temperatures. The next two months are the largest marketing periods of the year for replacement cattle. Late summer/fall video auctions are showing many pens of cattle passed out. These cattle will reappear on future auctions and will find a home at some point and at some unknown price. Those cattle owners opting to market through livestock auctions, know the cattle will sell, but they have no control over the price. Many of the replacement cattle moving to market are returning losses to the owners.
The replacement market joined the fed cash prices by staging a mild revival in prices. Both the futures and the cash index moved higher.
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, are dry. Planting grain fields requires rain to plant and give plants a chance to grow. Operators are hesitant about acquiring an inventory of cattle for winter grazing until they are confident in the existence of a viable forage for grazing.
Seasonally health problems begin for unweaned calves. Buyers are wary of stress caused by heat and weaning and many will avoid high risk purchases. The spreads between weaned and unweaned calves is widening. Some sellers will also attempt to avoid marketing calves through local sales to eliminate extra movement and costs.
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: To light a test on weaned cattle to set a trend. Steer calves were slightly softer and heifer calves were firm. For the first time in two months, relief from the heat is in sight, helping to boost demand. CME futures closed sharply higher today. Calves denoted with the description Value-Added are un-weaned and fancy. Supply included: 100% Feeder Cattle (47% Steers, 39% Heifers, 15% Bulls). Feeder cattle supply over 600 lbs was 37%
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 fell at week’s end. Traders question why the government chooses to release crop reports during trading hours. USDA crop estimates came in on target with the estimated yield dropping 2 bushels to 178/bu per acre. Total production was unchanged. Corn prices moved downward as the week is brought to a close. The corn basis moved to the December contract. Corn basis levels are moving higher and in Guymon, Oklahoma are at +$1.00 — basis the December contract.
FINDING A BASE PRICE FOR A MARKETPLACE
Under USDA’s Livestock Mandatory Reporting (LMR) system, USDA cannot publish data if doing so could reveal the identity of an individual reporting company. When too few transactions occur in a region or reporting period, reports are either withheld or heavily aggregated to protect confidentiality. Today three out of five major regional reporting areas are not reported.
More cattle continue to trade under formula, negotiated grids, and flat beef prices. These transactions require a start point or a base price. This leaves very few cattle to trade, even if they are reported. Among those that do trade, LMR refuses to report “over the tops” as a separate category despite the fact those transactions are known Monday morning and are not dependent on carcass traits for settlement. This category of sales obviously are premium offerings or packers would not pay higher prices. They are part of the cash trade each week.
Two camps have formed regarding reform of the current reporting system. One group advocates a government mandate outlawing formula contracts. These are contracts obligating producers to deliver to a certain plant under prearranged terms specified in the contract and dependent on the carcass traits for a final price. The other group recommends voluntary commitments by feeding firms to commit more of their inventory to weekly auctions of offerings with prices transparent to the industry.
The resolution is available today and is based on empirical auditable data. Processors are already required to issue a final price result on each group of cattle. These results are available by plant and by region. LMR currently compiles sales results by region on all cattle but the weeks are mismatched because formula and grid cattle results lag one week from spot cash prices. This lag can be corrected by creating an index of the following:
- Cash prices for the week by region. This will include all cattle sold one week for next week’s delivery at FOB prices. This bucket will include cash and “over the tops”. Seller delivered cattle can be adjusted to FOB prices using a nationally published freight rate per mile.
- Formula and grid prices. Grid and formula results are published each week by LMR LMR Cattle Dashboard | MMN. These sales are reported separately as grid and formula as a live FOB price and is currently reported by region. The results will lag the cash price week by one week. The premium or discount reported for the region, in per hundred weight, will be matched back a week to the previous week’s cash to create an index price variance for the week for all cattle. All sales from cash and grid, and formula will be price weighted by volumes.
- Base price determination. Each week’s base price for a region will be that week’s cash price per hundred weight, adjusted for the 3 previous week’s variance in hundred weight. All volumes for the base price will be volume weighted from cash, formula and grid cattle.
OBJECTIVE
TO FIND A BASE PRICE
The objective is to build a fair mid-point price index each week for cattle sold in the spot cash markets. This price point will provide a benchmark for those sellers desiring to commit to a certain plant or those interested in risking their ultimate price outcome based on the carcass traits of cattle offered for sale. USDA separates sales transactions into regions, and a base price index is necessary for each region.
EXAMPLE
Following is an example with sample numbers not intended to reflect the actual market.
NEBRASKA
| TYPE SALE | VOLUME | PRICE CWT |
| CASH | 25,000 | 226 |
| FORMULA | 25,000 | 227* |
| GRID | 50,000 | 230* |
| BASE PRICE | 100,000 | 228 |
* this is $1 average premium to cash based on a 4 week running average
* this is $4 average premium to cash based on a 4 week running average
ANALYSIS
The only known numbers are the cash prices and volumes for the week released Monday morning following the trade week. The formula and grid numbers have only volumes on Monday morning. The price associated with each bucket will be constructed from a running 4-week average of premiums or discounts for formula and grid transactions. The result will be a weighed average price for the week.
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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