September 3, 2026
MARKETS
Futures prices shot higher on Thursday and mostly halted live or dressed sales of cattle. Bids of $220 in the south were passed. Earlier sales mid week were from $217-$219 live in the north and dressed sales from $345-$350. A few cattle sold for $219 in the south yesterday.
The President macromanaging the beef industry is proof positive some people never learn from history. In the beef business, some still remember Nixon’s price freeze or the infamous dairy buy out and many other government interventions that not only failed but created unintended consequences that took major efforts to undo and correct. Beef producers should be encouraged to introduce a USA beef product and everyone hopes it finds success in the marketplace, but the marketplace is where success or failure is determined not Washington D.C.. Most of the small processing plants awarded funds during the Biden administration have already closed. Yesterday the administration announced it was opening an investigation on the 7 largest grocery chains for market manipulation of beef prices.
This past week’s slaughter was an estimated 543,000 head — 19,000 over the previous week and 25,000 under last year. This past week the slaughter volume increased as packers took the opportunity to make hay while the sun shines. Profits have returned to the packers helped by a reduction in slaughter capacities, demoralized sellers, and firm demand for beef. Total beef production for the week remains under last year. The sharp increase in slaughter volume combined with the end of Labor day buying, sent the choice boxes lower at week’s end. 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.
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 945#, 2# lower than the prior week, and 21# 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% from the previous week at 86.2%. The quality grade has begun to increase and grading will remain high historically.
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 were softer at mid week. This past week’s large slaughter volume was well absorbed by the marketplace. 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
Major adjustments are in the cards for replacement cost. Heat, rising grain prices, and falling fed cattle prices are setting the stage for major declines in the replacement market. Already sellers are finding buyers often non-responsive to offerings. The major feeding firms are backing off offerings and taking a wait and see attitude. Forward contracts will be difficult to find. Heavy marketing periods are on the horizon and plant and feedyard downsizing will be on the front burner.
Weather will always influence the market for replacement cattle. The main grain belt 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. 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: Feeder steers unevenly steady. Feeder heifers steady to 5.00 lower, but some lower prices also due to quality and or conditions. Demand moderate to good. A significant number of un-weaned calves were included and these trended lower. Steer and heifer calves 8.00-15.00 lower. Demand limited for calves. Cattle futures managed to close mostly in the green today. Persistent high temperatures and lack of rainfall continue to impact the region, and these conditions are expected to remain for at least the next 10 days. Overall, the quality of cattle available was mostly average, end attractive. Supply included: 100% Feeder Cattle (56% Steers, 39% Heifers, 5% Bulls). Feeder cattle supply over 600 lbs was 59%
Compared to last week: Steer calves over 500lbs 5.00-10.00 higher, under 500lbs steady. Heifer calves not enough comparables either this week or last week to set a trend but a firm undertone noted. The market held together very well today despite several negative factors: CME cattle futures closed in the red, quality was mostly plain, and hot and dry conditions continue with little relief in sight. Even with those pressures hanging over the market, buyers remained surprisingly positive and demand held up better than expected. Estimated receipts for tomorrow’s feeder sale is 2500. Supply included: 100% Feeder Cattle (37% Steers, 43% Heifers, 21% Bulls). Feeder cattle supply over 600 lbs was 23%)
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 reached an resistence point and finally dropped off recent highs. Feed cost during the coming year will make a sharp move upward making all protein meats more expensive. Severe heat has damaged much of the crop in the southern plains. The corn basis moved to the December contract. Corn basis levels are moving higher and in Guymon, Oklahoma are at +$1.15 — basis the December contract.
NEGATIVE FACTORS CONVERGE ON BEEF PRICES
Fed cattle prices have declined in a month from $260, near a breakeven for many cattle, to the current $220 price. $40 cwt. translates to $600/head on a 1500# steer. Even the most naïve cattle owner knows prices for any commodity don’t go up forever. Prices are market signals to produce more. Beef producers do have the expectation that market moves are the result of fundamentals.
The negatives that descended on the market were many and from varied sources.
- Severe heat across the plains. Heat stresses cattle and diminishes consumer demand for beef.
- Reopening the Mexican border. New supplies of replacement cattle will begin to arrive starting this past week and continuing port by port this year.
- Plant closing and restructuring. This was not unexpected and is part of necessary downsizing of the nation’s processing facilities.
- Trump’s beef import announcement. Government manipulation and interference in markets is always bad.
- Sharply rising grain prices. Corn crop estimates have fallen and prices have moved sharply higher.
- Rising interest rates. A 40 trillion dollar national debt and control on inflation are sending interest rates higher rather than lower. The market is anticipating two increases this year.
The administration mobilized to counter criticism from the public and media regarding the announcement of beef imports. Trump gave Glenn Beck an interview during which he blamed the fall in cattle prices on the big 4 packers. He promised less regulation on processors and grants to small processors to create more competition. This is a failed strategy on all fronts. Small processors cannot compete with the large megaplants in processing costs. Grants are just throwing money away. Innovation in processing beef is the only pathway to more competition as IBP demonstrated in the 1960s.
The irony of the decline in the cattle prices is the beneficiary is not the American consumer but the processors who have suffered hundreds of millions in losses. Beef plant margins have moved from negative $200-$300/head to positive $200. Fed cattle prices have declined this past month while box prices have rallied until this past week. Meanwhile the U.S. consumers are asked to eat meat from Namibia.
CARDINAL RULE FOR COMMODITY TRADING
“IF IT IS OBVIOUS, IT HAS GOT TO BE WRONG!”
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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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