September 28


Cash Cattle

Light trade developed earlier than expected when weak sellers in the south caved to steady bids of $143. Attractive basis levels caused by tumbling futures prices, were too much for some cattle owners. In the north only limited movement of a few head at $145 live occurred. Following a light purchasing week and smaller show lists, packers will require more purchases and most cattle are priced higher this week.

Slaughter volumes for this past week were 667,000 head — steady with the previous week and up 24,000 from last year. Saturday slaughter volumes have moderated and are an important control point for processors as they regulate supplies to stabilize prices. Weekly slaughter volumes are consistently exceeding prior year.

Cattle Futures. Futures prices were mixed with only the spot month holding barely in the plus column while the deferred months suffered small losses.

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 down 3# at 883#. Weights are 5# over prior year. Carcass weights will be fundamental in determining total beef production. 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% at 78.0%. Cattle appear to be pulled greener but are heavier because of incoming weights.

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 total number of forward contracted cattle has declined as deferred futures fail to provide sellers a profit margin for feeding. This will provide more liquidity to the cash markets as packers are pushed into the spot market for more of their weekly slaughter needs. The spread between futures and proforma break-even prices has made it difficult for packers to negotiate forward contracts.

The Cutout. The cutout was mixed with firm prices on choice cuts to weak select cuts and a widening of the choice/select spread. Processing margins are reduced but remain sufficient to assure a healthy slaughter number despite economic fears.

Beef Feature Activity Index. Price competition will determine the role of beef in marketing plans for the balance of this year. High feed cost has pushed chicken prices sharply higher. While pork prices are falling with larger supplies into the fall, beef continues to be a popular choice. Retail stores are struggling to find good margins on the meats. Beef is holding on to its fair share of the meat dollar with the most interest in lower quality cuts. The ramp up for holiday fare is beginning and beef assumes a more prominent role in holiday planning each year.

Replacement markets

Basis levels for replacement cattle have improved. This is what should be expected as feeder supplies dwindle. As smaller supplies of the replacement pool are felt in the market, feedlots will be forced to either leave pens empty, or dip down into lighter weight cattle to pull forward on future supplies. Auction barns have reported over 10% fewer yearlings since June 1st of this year. Drought has forced many lighter cattle to the feedlot during July and August. With grazing possibilities dimming for this winter, feedyards will once again be forced to pull lighter weight cattle to feed. In a high priced feed environment this is not a good option.

The entire year has witnessed large premium prices for the deferred feeder cattle futures contracts. Those expectations were realistically built on the numbers of available cattle in the future determined by simple mathematical analysis. The large anticipatory premiums in the deferred futures prices have largely disappeared as expectations for future prices are lowered and feed cost show no signs of relief.

Oklahoma City. — Feeder cattle were $4-6 lower while calves fell $10-15 cwt. lower.

OKC West  —

Feeder Cattle Futures. Feeder futures fell with all market signals turning negative. Economic fears are dominating trading.

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.

National Weekly Feeder Summary released on Friday of each week tracks the national prices by region for last week.   

Grain Futures. Corn prices were flat as demand for grain for export, with a record breaking dollar, and weakening world economies drive prices downward. Harvest is beginning on the southern plains bringing much needed relief to the basis levels. Current basis offerings in Guymon, Oklahoma is $2.00 over the December contract. Dealers are beginning to offer OND new crop corn at $1.80 over the December contract basis Guymon.


There is an age-old conflict between the marketing team and the production team in any business. The marketing folks are interested in increasing sales and often have too little regard for proof of the claims made and presented to consumers.  The production people must live with those claims, and in a very litigious society, loose claims often result in lawsuits.

Whole Foods, the bastion of wholesomeness, was recently the recipient of a consumer lawsuit over beef labeling. The never/never label with regards to antibiotics or hormones was claimed to be refuted by lab analysis. Whole Foods beef sales have lagged other grocers and have heavily relied on “grass fed”, but many consumers have found true “grass fed” to be tough as nails. More recently, Whole Foods has relied on never/never claims as beef product offerings begin to include more marbled cuts.

The popularity of “grass fed” has transitioned to many different branded products – most of those include some form of grain finishing to deliver a product with improved eating experiences. The labels often say, “grass fed” which almost all beef products can claim and then in small print “grain finished”. Other products claim to originate on grass farms rather than feedlots that have been vilified by the media. Of course, there are grain troughs on the grass paddocks.

Retailers and brand marketers can attempt many different subterfuges to present a more popular product, but cost will override all those campaigns in the final analysis. Taste and price will dominate the landscape of beef sales and especially during this economic downturn. With inflation on the minds of all consumers, the search will be for the right tasty and healthful product at a good price. It will not be surprising during recessionary times, with the choice/select spread approaching $30 cwt., to find some retailers willing to modify purchase contracts and switch to Select beef.

In a day of sky-high feed costs, overheated feeder cattle costs, and rising interest rates, the cost to raise never/never beef may become too much. The heavy record keeping expense, third party auditing, and elevated cost of gains will price the product out of the market for many consumers. Changes in the beef landscape may create conditions where the most important label on any beef package is price/pound. The requirement for the beef industry is to produce a healthy product with minimum environmental impact and at a competitive price on the meat counter.


Our friends at the Agcenter, the host of this publication, have allowed us to show a job posting from their private listings. If there is sufficient response from the many readers of this publication, job posting could become a featured link in THE CATTLE REPORT.

Management level job posting by Texas Beef – an integrated cattle company with two feedyards in the northern Texas Panhandle.



Below are links to articles published in the Cattle Report pertaining to industry change. Two important changes are on the table for progress — supply chain management and animal ID. Both applications will transform and disrupt the industry.

The Beef Blockchain

THE Beef Blockchain Slide Show

The Case for National ID for Cattle

Reforming the Futures Contract and Cash Trading of Cattle


Sections of the newsletter are redesigned with hyperlinks to the appropriate source pages. The hyperlinks are in light blue within the report.


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. 


The Cattle Report introduces the FEEDER METER. The report estimates profit or loss for currently purchased feeder steers and projects a result 150 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 and fed cattle sales are par the appropriate futures contract.


The Cattle Report estimates current profit or loss on cattle placed on feed 150 days ago. This report generated from industry averages attempts to simulate a typical close out based on prevailing purchase prices for a feeder steer 150 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.