February 3, 2023



Total purchases in the cash markets by packers this week would fail to complete the needs of the A shift at one of the larger beef plants. The few cattle purchased in the north produced a range of live prices from $155-158 and dressed from $248-$252. The market is definitely higher and sellers are unwilling to price firm cattle at $1 up from last week. Expect more trade to develop today as short bought packers scramble to put together next week’s buy.

It is rarely good news when the Fed announces increases in interest rates. This week was an exception when the rise came in the form of a .25% rise instead of .50%. This provided some evidence to the markets that we are nearing an end to the rapid rise in rates as the economy slows, with hopefully a soft landing.

The movement in box prices this week has been a narrowing of the choice/select spread. Improved grading throughout the country reflects the arrival of yearlings placed last fall that historically and seasonally bring the choice/select spread to the narrowest point of the year. This will also remove a large portion of the premiums enjoyed by northern cattle during a period of wide spreads. There is developing some evidence consumers are backing away from prime cuts as the household budgets are strained.

The weekly slaughter was a surprisingly large 659,000 up 13,000 the prior week and 4000 above last year. Declining supplies of cattle, lower marketing weights and continued weather will keep packers on the defensive for cattle needs. Inventories of packers for next week are short from a light buy this week.

Cattle Futures. Cattle futures were sharply higher with April leading the way. The spot February contract hovered around $160 where most cattle are priced in the cash markets.

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 884# up 3# from prior week and 9# lower than last 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 up .4% at 84.90%. As more yearlings placed last fall are harvested, the grading trends higher.

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 flattened out as many retailers move to take on more inventory after the recent drop and improvement in the economic outlook.

Beef Feature Activity Index. Most retailers are planning fewer beef features for the new year anticipating smaller supplies. Winter beef consumption shows variability in consumer tastes as roasts and hamburger receive more attention than the middle meats. Recessionary pressures will also impact marketing decisions by retailers for meat features. Price will play an important role among the meats to determine the role of beef in marketing plans with many retailers forecasting smaller margins for beef.

Replacement markets

With winter weather covering much of the country, demand for replacement cattle has slowed as have receipts at the auction markets. No one questions the fact that 2023 will see fewer cattle but how the recession will interplay with the markets is a question no one can answer. The extent of the decline in total cattle numbers will be available on Tuesday when the January 1 cattle inventory is released.

Government subsidized Put options are popular as a tool to backstop a price decline. The emboldens stocker operators to bid up prices for light calves while holding some downside protection in their pocket.

Oklahoma City. — Weather sharply curtailed receipts for a force market of higher prices.

OKC West  — Weather.

Feeder Cattle Futures. Feeder futures were sharply lower as futures prices adjust to current conditions.

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.  Grain prices flattened. The basis levels continue to weakened on corn. Current basis offerings in Guymon, Oklahoma are $1.60 for FM corn basis the March contract.


Artificial Intelligence (AI) will be the next guiding light for new development in all businesses – machine learning. AI bots are populating the web and, if you haven’t seen them, you haven’t been on the web lately. GPT-3 is the intelligence language generating Chat bots for thousands of websites and it currently generates an average of 4.5 billion words per day. They are created by OpenAI, a San Francisco-based artificial intelligence research laboratory.

In American agriculture, expect to see more sites making use of this new technology. The quality of the text generated by GPT-3 is so high that it can be difficult to determine whether or not it was written by a human, which has both benefits and risks. The positive side is the production of helpful information that can provide answers to everyday questions and problems. A user can reference a medical condition of a sick animal and ask for the best recommended treatment. Or a user can profile a pen of finished cattle and ask the Bot for a recommended marketing method – even including the beef plant with the best grid to fit the cattle. Or the user might enter a list of feed ingredients and costs and ask the Bot for the optimum low cost ration and recommended percentages.

Relying on the Bot to provide the right answer can be tricky and in the early stages of development will result in many failures that will trigger frustration and disappointment, but as with any learning processes, the Bots will get better and better by getting smarter and smarter. Also, not all this information will be for free – fees will be associated with many of the services. Other Bots will enhance the user experience with a particular business. A farmer might describe the conditions on the farm, moisture and soil profile, and ask the Bot for the best seed and recommended planting time. The seed company will use the Bot to save time and expense for their marketing team.

Price discovery will be more difficult using a Bot but one feeding company is already offering a LIVE BID BOT for replacement cattle on their website www.tbp.com.  The Bot is designed to collect the necessary information to profile the cattle for a price point. Outreach to solicit new offerings of feeder cattle will be common in a time of declining numbers.

Experimentation will be the order of the day as buyers and sellers discover new ways to unravel the age-old practice of bargaining. Feedlots might find use in a marketing Bot that would key up fed offerings every week at the same time — using a Dutch auction format. The Bot would start pricing at $160 and drop the price a half dollar at a time until some buyer hit the button and purchased the cattle. Grain companies might use the same format for weekly grain basis offerings from a given location — starting the bidding high then lowering the basis by 1 cent until some feedyard hits the buy button. As with any innovation, the product will continue to improve.


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.