July 4, 2026
MARKETS
HAPPY 250TH BIRTHDAY
President Trump chose Mount Rushmore as the backdrop for an important Birthday message to Americans. In a speech honoring America’s 250th Birthday he reminded all Americans of the identity we have earned and the assault on that identity by recent electorial victories by self identified Democratic socialists.
This past week closed with prices declining $3-5 marking the first progress on processing margins in many weeks. Sales in the south were mainly at $255 and $255-256 in the north with dressed sales at $403.
The expiring June live cattle contract gives way to August as the spot month — with August selling at a large discount to this week’s cash prices. Futures prices have declined five days in a row signalling a loss of confidence in the market’s ability to hold the current levels.
The administration announced SPUR (Strengthening Processing for U.S. Ranchers) — a give away program to small processors to allow them to compete against the the large 4 firms that dominate the beef processing business. The program is designed to lower beef prices while providing a more competitive market for cattle owners. The logic of this program eluded most industry participants.
This week’s slaughter was an estimated 440,000 head — 100,000 under last week because of the holiday. The slaughter volume was 40,000 under last year. The actual numbers will be available on Monday. The processors faced stiff headwinds for the entire month of June and recovered some ground this week as cash markets declined. The backdrop for fed supplies will remain tight and cattle owners will hold some leverage but the sustainability for processors to lose $300/head is not a viable proposition.
Five days of declines have been posted and the August contract is currently $15+ under this week’s cash.
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 942#, 4# lower than the prior week, and 35# 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 .9% from the previous week at 86.4%. 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 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.
Beef demand will now move into summer periods that have historically been favorable periods for beef consumption. The high price of beef is always a risk for damage to demand and the continuing interest of the administration to lower beef prices is a constant threat. Beef must suffer a loss of marketshare, not because of price, but simply because we are producing less beef. 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 softened into the holiday. Most expect box prices to be lower following the 4th but light retail inventories might provide the basis for some surprises. Slaughter volumes will continue to be dictated by processing margins.
Replacement markets
Spring rains and in some cases flooding have entered the picture. The dry areas across the south have been refreshed with large rains that sometimes bring too much at once. Rains across many of the dry and burned areas are reviving forage even while fires rage in Utah. Replacement markets are driven by grazing demand while at the same time influenced by a new pessimism that is creeping into the market. The realignment has done little to improve feeding margins that will eventually close some feeding facilities as the processing plant capacities have declined.
Additional screwworm cases are added with restricted areas surrounding each new case. The new number of 30 probably understates the problem because many cases are unreported. Sheep, goats, and cattle have been reported in both Texas and New Mexico. Sterile fly production is ramping up and beef producers will be learning to live with the health problem.
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 and heifers unevenly steady in a light comparison. Heavier weight feeder steers appear some cheaper on paper but quality not as attractive and it was difficult to fill loads. Demand good for feeder cattle despite the downward pressure in cattle futures today. Steer calves 10.00-20.00 higher. Heifer calves 5.00-15.00 higher. Demand very good for calves. Heavy rains hit last week but
now the spicket has been shut off and high pressure has set in over much of the state. Temps in the mid 90’s to 100 and heat indexes expected to be well into the 100’s for well over a week. Grass pasture has improved following these rains. Supply included: 100% Feeder Cattle (61% Steers, 35% Heifers, 4% Bulls). Feeder cattle supply over 600 lbs was 67%
No market this week
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 were mixed. USDA pegged corn acres at 95 million acres. The corn basis narrowed slightly as low prices force some farmers to cash last year’s crop. Corn basis levels in Guymon, Oklahoma are at +$1.10 — basis the July contract.
ALL THE NEWS THAT’S FIT TO PRINT
The email caught my attention. The web service promised instant alerts on breaking news about cattle or beef, along with an AI-generated report that would summarize the news and explain the expected market reaction for quick, easy reading. This is the kind of service many believe is triggering many of the sharp moves up or down in futures contracts with automated order flow.
The problem is not with the service but with the collection of the stories. Just this past week a Tik Tok video reported an outbreak of numerous outbreaks of the new world screwworm in Nebraska. This was joined by another report of the border opening to Mexican cattle imports. The adage that you can find anything you want on the web, and because the sources are not confirmed or filtered, the information is often wrong.
The range of misinformation is wide and far reaching. It spans from product advertisements that promise results they can never deliver to outright fabricated news stories designed to fake out traders who act on the information. When you combine this with market moving information that is held back from publication until insiders can establish positions for profit, you have a torturous landscape.
The simple solution is sticking to well-known filters of news. There are publications on the web that check out their information before publishing. This of course slows the reaction time to the news, but it also prevents gaslighting. We live in a whacky world and questioning the reliability of daily information is a constant problem familiar to all of us. Even the most reliable and accurate information is sometimes hard to believe.
MANDATORY PRICE REPORTING
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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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