Livestock Markets

Beyond the Sale Barn: How AtTheYards is Digitizing Cattle Marketing

Wed, 25 Mar 2026 19:05:57 GMT

Ranching shows just how delicate the balance between tradition and innovation is to keep businesses profitable without forgetting where they came from. But, what if tradition holds us back in an area that highly impacts profitability — cattle marketing?

“In 1884 the Omaha Stockyards opened. In 1908 the Model T was invented, and nobody’s driving a Model T anymore — but 65% of feeder cattle still trade through sale barns,” says Jacob Sebade, cofounder of AtTheYards. “Sale barns offer a lot of benefits, don’t get me wrong, but finding a way that puts more power in producers’ hands is really important.”

Sebade grew up involved in the family feedlot in eastern Nebraska. After earning a degree in business and working for an accounting firm post-graduation, he ultimately found his way back to the family operation with a desire to solve cattle marketing challenges for both ranchers and feedlots.

For ranchers, Sebade recognizes how lack of speed to market and commission are difficult challenges to overcome with current marketing avenues available.

He says, “Speed to market — being able to market cattle when you want and how you want — probably has the biggest impact on a producer’s bottom line.”

Speed to market is even more important to ranchers when market volatility is brought into consideration.

Sebade explains, “With the volatility we’ve seen in the market, prices can move significantly in a week or two.”

Commission also stings when the bigger picture is evaluated.

“Two to 3% commission can easily be north of $50 a head, and that’s very material money over time,” shares Sebade.

On the flip side, feedlots also experience challenges acquiring cattle.

He says, “Finding cattle that you’re interested in is a constant search and find, search and find, search and find.”

Video auctions have made it easier to view and see cattle from across the country but still have challenges of their own.

“Everybody involved in the industry has a million things to do, so sitting there watching video auctions or constantly searching for cattle makes it difficult when you’ve got chores and a lot of other things going on,” says Sebade.

The crossroads of these challenges and two sectors of the beef industry is where AtTheYards comes to play.

AtTheYards is an online cattle marketing platform that provides speed to market, increased reach and more control for ranchers as well as a more efficient sourcing platform for buyers.

“AtTheYards uses custom templates where buyers set parameters for the cattle they want,” says Sebade. “When cattle are listed that match those parameters, buyers get a notification immediately.”

He offers the following as an example: “If 40 buyers are looking for 600- to 800-lb. steers in North Dakota, and a rancher posts this type of cattle, all 40 buyers get notified.”

The process itself is straightforward, once the account is set up, a rancher can consign their cattle through the app or web-based platform. Once the cattle go live on the marketplace at 8:30 a.m. CST the following business day with notifications sent out to buyers at 8 a.m. CST.

Transactions take place in two ways. The first is the buyer utilizing the “Buy Cattle” feature, which means the buyer is agreeing to the terms of the transaction set forth by the seller in their consignment. The second is a buyer placing a bid on the cattle that generates a text message notification to the seller. The seller can then choose to accept the bid.

Additionally, AtTheYards is a marketplace that offers delivery options beyond just forward contracting. While it does allow for Ranchers to set future delivery windows, Ranchers can also choose a delivery window of “ASAP,” which means the cattle ship as soon as Possible after a transaction is agreed to, but no later than 10 days after a transaction happens.

The commission structure of AtTheYards is $5 per head to consign cattle and $10 per head to clear the money, or $15 per head all-in. When asked about a rancher’s risk in trying AtTheYards, Sebade mentions the consignment fee as being the biggest risk.

He says, “Paying the consignment fee and the cattle not trading is the main risk. To offset this risk, AtTheYards is waiving the consignment fee on every rancher’s first consignment.”

As you think about your current cattle marketing strategies, don’t be afraid to explore something new and ask questions.

Listen to the full conversation on the Casual Cattle Conversations podcast .

Buckle Up: Cattle Market Structure Signals the Highs May Still Be Ahead

Fri, 06 Feb 2026 15:51:03 GMT

For cattle producers wondering whether today’s price levels are sustainable, or whether the market has already peaked, the underlying fundamentals suggest the industry may not be finished yet. Despite historically high cattle and beef prices, the U.S. cow herd continues to contract, herd rebuilding has yet to meaningfully begin and beef demand remains resilient even as prices climb. And when you combine those forces together, it’s a recipe that indicates tight supplies are likely to persist well into the second half of the decade, setting the stage for continued strength, and potentially even higher highs yet this year.

That outlook was reinforced during a U.S. Farm Report roundtable markets discussion at this year’s CattleCon in Nashville, with Oklahoma State University Extension livestock economist Derrell Peel, Don Close, senior protein analyst for Terrain, and Joe Vaclavik of Standard Grain.

Close has been in the business for 48 years, and he says he’s waited his whole career for this, as the dynamics in the cattle market continue to build a strong case for cattle prices. And while there is definite risk at these price levels, and volatility is certain, both Peel and Close are bullish on cattle this year.

Inventory Report Confirms the Industry is Still Shrinking

The latest USDA Cattle Inventory report released last week showed another year-over-year decline in beef cows, underscoring just how tight supplies have become. While the number itself was not shocking, the market’s reaction reflected the realization that contraction is not over.

“The fact that [the beef herd] was down some was not a particular surprise,” Peel says. “I thought it also could have been up slightly, so plus or minus unchanged. It came in a little smaller than that. But in general, the report from my standpoint was pretty much what I expected.”

What matters most, according to Peel, is not a single percentage point, but the trend line producers are still on.

“The net effect is we continue to get smaller in this industry, and we are not growing at this point,” he adds.

For producers hoping tighter numbers would soon give way to expansion, the report instead confirmed the industry is still digging deeper into contraction.

Replacement Heifers Signal Intention, Not Expansion

One of the few increases in the report came in beef replacement heifers, but Close cautions producers should not confuse that with meaningful herd growth.

“I think it’s an encouraging indication that they’re starting to think about it,” Close says. “If you look at the offset to the decline in count numbers to an increase of 42,000, 44,000 heifers, there’s no real offset there. We’re still in the infancy of any expansion, and it can, depending on weather, go either way.”

From Close’s perspective, the increase reflects mindset more than action. After several years of drought and forced liquidation, producers are beginning to consider rebuilding, but that process is slow, cautious and far from uniform.

“I think the anecdotal evidence we’re seeing when talking with producers is [they’re] starting to see some very modest expansion,” he says. “And I would conclude with the number of ads we’re seeing online of bred heifers for sale, we’re just starting.”

That “just starting” phase suggests calf supplies will remain tight for several more years, even if expansion intentions continue to grow.

Very Solid Technical Uptrend in Cattle

From a market structure standpoint, Vaclavik says cattle and feeder cattle futures continue to reflect the supply realities producers are seeing today.

“The cattle market and the feeder cattle market are two of the strongest and most orderly bull markets that we’ve seen in a long, long time,” he says.

Vaclavik points to the long-term chart as evidence the rally is not speculative, but fundamentally driven.

“You basically go back, and it’s very easy to see. You go back to when the lows were posted in 2020, like right around the COVID timeframe, and what we built out of that,” he says. “I know there’s been some volatility, but big picture, it’s a very, very solid technical uptrend.”

While he acknowledges the potential for short-term disruptions, Vaclavik says the underlying fundamentals remain firmly in control.

“I just, I don’t see anything fundamentally to set this thing back,” he says. “I do worry about things like headline risk. You know, you worry about ‘Is Trump going to go on another crusade against beef prices?’ ‘Is there going to be a screwworm headline?’ There’s a lot of things that, over the near term, could result in a setback.”

However, he emphasizes recent inventory data does little to change the bigger picture.

“I just, I don’t see it as being material. It’s not enough to reverse the course,” Vaclavik says.

Market Structure Suggests the Highs May Not Be In Yet

When asked whether cattle prices have already peaked, Close was clear in his assessment.

“We’re not convinced we’ve seen the highs,” he says.

Looking at supply constraints and demand strength, he sees room for additional gains in fed cattle prices.

“We’re thinking we could see fed cattle prices this year up an additional 8% to as much as 10% over the average prices we saw in 2025,” Close says.

He points out the market correction tied to political headlines last fall ultimately strengthened the rally prices are currently experiencing, rather than ending it.

“When we went through that period in October, we had the headlines and the involvement from the administration, and that really gave us a scare, but it also gave a correction in the market,” he explains. “So, when we take the fundamentals we think we’ve been working with, and that was confirmed in that cattle inventory report last Friday, I think the structure of the market to continue the rally is absolutely in place.”

Even with the resounding bullish sentiment headlining the discussion, Vaclavik has a clear and pointed message for producers.

“I love all this optimism, but it scares me a little bit. Remember to keep your business a business. Don’t gamble,” he says.

Herd Rebuilding Timeline Keeps Slipping

One of the most critical implications for producers is how far the industry has delayed rebuilding the cow herd.

“We keep pushing off the timeline,” Peel says. “Every year that we could have started some heifer retention, we haven’t. So, I think we’re still pushing off that timeline.”

Even if producers begin retaining heifers in 2026, Peel says the biological clock means supply relief will not arrive quickly.

“If we start saving heifers in 2026, then that’s the start, but time it out. If you save a heifer calf in ’26, breed her in ’27, it’s 2028 or the end of the decade before we change beef production,” he says.

Peel also notes replacement heifers will first be used just to hold the line.

“The small increase we saw in replacement heifers may signal that we’re thinking about it a little bit,” he says. “But the other thing you have to keep in mind is that the beef cow herd has gotten smaller, and we’ve been culling less, so we need to replace some of those cows going forward. It’s going to take some of these additional heifers just to maintain the herd we’ve got.”

Delayed Culling Could Push Slaughter Higher

Close adds that years of holding onto older cows could create another wrinkle in the supply picture.

“If you take the number of cows that probably should have gone to town, but were kept back in 2024 to get one more calf, the same thing repeated in 2025,” he says. “I actually think we could see a modest increase in cow slaughter in 2026 just because of those cows that we kept an extra year or two longer than they probably should have stayed.”

That dynamic could further slow the pace of true herd expansion, even as producers begin thinking about rebuilding.

Another Bullish Factor: Beef Demand Continues to Hold Firm

High prices have raised concerns about whether consumers will eventually push back, but Close says demand data continues to defy that narrative.

“Over the last two years at Terrain, we’ve spent more time trying to evaluate and study what we can about demand,” he says. “We’ve known what the supply is.”

By examining beef prices relative to income, inflation and competing proteins, Close said the results remain consistent.

“We’re looking at all-fresh beef prices against the consumer price index. We’re looking all fresh against average hourly wage. We’re now looking at beef in relationship to both pork and broilers,” he says. “And all those matrices that we’re looking at, we’re not seeing and have not yet seen any softening in beef demand. It’s still in place.”

Peel agrees consumer behavior continues to support higher prices, even if there is talk about bringing beef prices down.

“I don’t think we have a demand problem or a beef price problem. Consumers are still paying,” Close says. “If consumers didn’t want to pay high prices for beef, they don’t have to. There’s places they can go. They’re still paying it.”

Tighter supplies mean prices may need to rise further.

“We do have supply getting tighter, and it’s going to continue to get tighter, which probably means we’re going to use higher prices in the future to ration a tighter supply even compared to where we are now,” Peel says.

What it All Means for Cattle Producers

With herd rebuilding still largely on hold, cow numbers continuing to tighten and beef demand holding firm, their message to producers is consistent: the fundamentals that drove cattle prices to record levels are still in place. While volatility and headline risk remain, the supply-side realities suggest the market may not yet be finished rewarding cattle producers as the industry heads toward 2026.

'The System Is Failing Us:' Why Real Change is Needed in U.S. Agriculture

Wed, 29 Oct 2025 13:57:30 GMT

Joe Maxwell doesn’t pull punches — especially on the topic of the future of American agriculture.

“The system is failing us,” says Maxwell, co-founder of Farm Action , during a recent episode of “Unscripted.” “It’s failing the people. It’s failing family farmers and ranchers. And it’s failing consumers. We can’t keep pretending everything’s fine.”

The Missouri farmer and former lieutenant governor shares an uncomfortable truth: The economic model that has shaped U.S. agriculture no longer works for those producing America’s food.

Commodity prices remain under pressure, input costs stay stubbornly high and government payments — while keeping some farms afloat — often mask deeper structural problems.

“We’re on this hamster wheel,” Maxwell says. “Government sends out a bailout, input companies raise prices and the money flows right back up to them. We think we’re being helped, but really, we’re just passing the money through.”

From Missouri Roots to National Reform

Maxwell grew up on a family farm in Missouri and lived through the 1980s farm crisis. That experience shapes his conviction that policy, not luck, determines who survives in agriculture.

That belief lead him and Ohio farmer Angela Huffman to co-found Farm Action, a nonprofit working to “connect the dots” between policy decisions, corporate consolidation and on-farm economics.

“We see a need for a farm organization that looks up and down the entire food chain,” Maxwell explains. “Everyone’s focused on one part of the system — fertilizer here, seed prices there, meatpacking somewhere else — but no one connects them. Farm Action connects those dots and pushes for policy that works for independent producers again.”

“We Don’t Feed the World Anymore”

Maxwell challenges one of agriculture’s most familiar slogans.

“Let’s be honest — we don’t feed the world anymore,” he says. “We import 60% of our fruit, over a third of our vegetables and record amounts of beef. We have a $47 billion agricultural trade deficit. The world is starting to feed us.”

He argues that U.S. farm policy has become overly dependent on exports of feed and fuel crops, while overlooking food crops and livestock production that directly feed Americans. Maxwell calls for farm programs that reward food production rather than commodity production.

“Every year we lose up to 1.8 million acres of pasture to row crops,” he notes. “That’s a failure of policy. We make it easier and more profitable to grow corn for fuel than to raise beef or vegetables for food. That’s not national security — that’s national vulnerability.”

“Let’s quit lying to ourselves. We don’t feed the world anymore — the world is beginning to feed us.”— Joe Maxwell, Farm Action

The Growing Grip of Consolidation

Maxwell points to consolidation as the most dangerous — and least understood — threat facing independent producers. From fertilizer and seed to meatpacking and grocery shelves, he says control has concentrated into the hands of just a few corporations.

“The power dynamic in agriculture has flipped,” Maxwell explains. “Farmers used to have leverage. Now, a handful of companies control nearly every input we need to farm — and they set the prices we pay. Then they control the markets we sell into, and they set those prices, too. That’s not a free market — that’s corporate feudalism.”

He points to Farm Action’s Concentration Tracker, a public data hub that compiles market share information across the food system. It shows that:

Four companies control over 80% of beef processing.
Two companies dominate more than 75% of corn seed genetics.
Three firms hold the majority of fertilizer production capacity.
The top five grocery chains now capture nearly 65% of all food retail sales.

“When just a few players hold that kind of power, they don’t compete — they coordinate,” Maxwell says. “They can raise input costs and suppress farmgate prices, and farmers have no real alternative. That’s why our concentration tracker matters — it exposes what’s really happening behind the curtain.”

The problem, he says, isn’t just economic — it’s political.

“These corporations have so much money and influence they shape farm policy to fit their own balance sheets,” Maxwell adds. “When we go to Washington asking for help, they’re already there, writing the rules. Until we restore fair competition and transparency, every bailout, every policy tweak is just feeding the beast.”

Farm Action’s data shows concentration doesn’t just hurt farmers — it hurts consumers, too. From fertilizer to feed to food, fewer companies mean higher costs for everyone.

“You see it every time you go to the grocery store,” Maxwell says. “Beef prices are high, but cattlemen aren’t seeing that profit. Fertilizer prices spike, but farmers don’t control the market. Consumers pay more, farmers earn less, and the middle consolidates the wealth. That’s not sustainable for anybody.”

It’s a concept gaining national traction. Just this week, the Senate Judiciary Committee held a hearing on the soaring costs of inputs.

Sen. Charles Grassley (R-Iowa) also introduced legislation to address the rising costs of inputs, called the Fertilizer Research Act . But the hearing brought together the larger issue of rising costs across the board for farmers.

“This hearing is focused on competition issues. However, there is something that the Trump administration can do right now to help ease the burden for farmers: lowering the countervailing duties on phosphate from Morocco. In 2024, the Biden administration increased duties on Moroccan phosphate to 18%,” said Grassley in his opening statement. “The Biden phosphate duties have only hurt farmers by boxing out access to this important market on an essential input with no substitute. I’m calling on the Trump administration to help American farmers and get rid of the Biden phosphate duties.”

The Beef Debate: “We’re Blindsided”

For ranchers, the issue of consolidation has long been a point of contention. But recent comments by President Trump sparked a renewed push for change and a probe into who and what really controls the prices consumers are paying.

When the White House signaled it will allow more beef imports from Argentina , Maxwell says many ranchers feel blindsided.

“Our cattle herd is at a 70-year low,” he says. “Ranchers finally see light at the end of the tunnel — and then Washington steps in to import more beef. That’s not just a policy mistake, it’s a psychological one.”

He argues that the frustration isn’t only about imports; it’s about the perception that the administration doesn’t understand the complexity of the cattle market.

“Cattle producers don’t set the price they’re paid — packers do,” Maxwell explains. “So when the president talks about lowering prices for consumers without addressing packer control, he’s aiming at the wrong target.”

“We’re finally seeing the light of day. Then government puts its hand back on our backs.”— Joe Maxwell on the U.S. cattle market

“It’s Time for DOJ to Step In”: Why the Beef Industry Needs an Investigation

He says instead of the Trump administration focusing on cattle prices, Farm Action thinks what happened in the egg industry during past price spikes is exactly what needs to happen now in beef: a full federal investigation.

“Two companies control 90% of hatcheries in the U.S. egg industry,” Maxwell explains. “When egg prices exploded, Farm Action presented evidence to the Department of Justice showing that those companies were profiting at historic levels while blaming avian flu. And you know what happened? DOJ opened an investigation. That’s what accountability looks like.”

Now, he says, the same pattern is playing out in beef.

“We’ve already seen price-fixing cases in the cattle sector,” he says. “Two of the major packers admitted it back in 2019. We shouldn’t have to spend years in court to prove what every rancher already knows — that a handful of companies are manipulating the market.”

The so-called “Big Four” — Tyson Foods, JBS, Cargill, and National Beef (controlled by Brazil-based Marfrig) — control roughly 85% of U.S. beef processing capacity. That concentration, Maxwell argues, allows them to influence both the price paid to producers and the price charged to consumers.

“It’s an abusive system,” Maxwell says. “They squeeze ranchers on one end and shoppers on the other, and everyone in between gets caught in the middle. The packers are the only ones guaranteed to make money, no matter what happens to the market.”

He calls for the Department of Justice to launch a new, comprehensive investigation into price manipulation and anti-competitive behavior within the beef industry — similar to what Farm Action pushed for with eggs.

“We need DOJ to do in beef what it finally did in eggs,” he says. “Follow the money, follow the profits, and hold these corporations accountable. Because right now, the people who produce our beef — the ranchers who’ve weathered drought, inflation, and decades of consolidation — are getting crushed while multinational packers report record margins.”

Maxwell says the Biden administration has taken small steps, but much more needs to be done.

“It’s not enough to tinker at the edges,” he warns. “We need enforcement — real enforcement — of the Packers and Stockyards Act, the Sherman Act, the Clayton Act. The laws are already on the books. What’s missing is the will to use them.”

Country-of-Origin Labeling: A “No-Brainer”

Maxwell says Farm Action is pushing hard for mandatory Country of Origin Labeling (M-COOL) as part of the upcoming USMCA review in 2026.

“Consumers deserve to know where their beef comes from,” he insists. “The president could fix this tomorrow by negotiating M-COOL into the trade deal. That one move would give American ranchers a fair shot.”

He dismisses claims that M-COOL violates WTO rules.

“WTO is dead in the water,” Maxwell argues. “There’s no functioning tribunal to even hear a case. The only people fighting this are the packers — JBS, Tyson, Cargill, Marfrig — because they profit when foreign beef gets a U.S. label.”

Structural Change, Not Another Bailout
When asked whether Farm Action supports another round of USDA bailouts for struggling producers, Maxwell doesn’t hesitate.

“We recognize farmers are in crisis,” he says. “We don’t want to see our neighbors driven off the farm. But we can’t just keep sending out checks without fixing the system. One day those bailouts won’t come, and then it’ll look just like the 1980s. We have to demand structural change.”

Those changes, he says, should include:

Capping farm subsidies to slow consolidation.
Rebalancing insurance and incentive programs toward food production.
Rebuilding local and regional processing capacity to compete with the “Big Four” packers who control 80–85% of the cattle market.
Stronger enforcement of antitrust laws like the Packers and Stockyards Act and the Sherman Act.

Rebuilding from the Ground Up

Despite his criticism, Maxwell frames his message as one of hope — if farmers and ranchers take the lead.

“We can’t sit back and wait for Washington to fix this,” he says. “We have to step up, be part of the conversation, and demand policies that keep family farms in business.”

He supports Rep. Thomas Massie’s Prime Act, which would expand small-scale meat processing and let states regulate local slaughterhouses directly.

“We’ve got the infrastructure,” Maxwell adds. “We just need to give it life again. Let’s rebuild local processing so farmers can sell directly to consumers and keep value in their communities.”

Why It Matters Now

Fresh data from the Farm Journal Ag Economists’ Monthly Monitor shows that 76% of agricultural economists expect conditions to persist or worsen over the next year. Many see echoes of the 1980s — though they warn today’s crisis is more complex.

“It’s not the 1980s all over again,” says Unscripted host Tyne Morgan. “But the pain is real. Economists say the situation could worsen in 2026 if structural issues aren’t addressed. That’s what makes conversations like this so important.”

A Call to Action

As the conversation wraps up, Maxwell’s tone shifts from urgency to determination. His message to rural America is both a warning and an invitation.

“We have to lead,” he says, pausing before adding, “because no one else is going to do it for us.”

He says the future of U.S. agriculture depends on whether farmers choose to engage in these hard conversations — the ones about fairness, policy, and the future of independent family farms.

“Look, we can’t afford to sit on the sidelines and hope someone in Washington suddenly understands our way of life,” Maxwell says. “Every farmer, every rancher, every person who believes in feeding people instead of feeding systems has a role to play. It starts at the local level — showing up, speaking up, refusing to accept that the current model is the only way forward.”He continues:

“This isn’t about right or left, or about politics at all. It’s about survival — for the people who feed this country. We can’t keep patching the same broken system and expecting it to serve us. If we want a food system that’s fair, resilient, and rooted in our rural communities, we’ve got to build it ourselves, together. That’s the hard truth — and the hopeful one.”

Maxwell’s words linger long after the conversation ends — a challenge, but also a call for courage. Change, he insists, isn’t something that happens to farmers. It’s something that must happen through them.

Listen to the Full Conversation

Listen to the full interview: “Unscripted” with Tyne Morgan and Clinton Griffiths featuring Joe Maxwell, a vailable on Farm Journal’s YouTube channel and anywhere you stream podcasts.

Several Factors are Driving Strong Cull Cow Markets

Tue, 22 Jul 2025 10:33:41 GMT

Cattle markets have been impressive across the board in 2025, and cull cow markets have been no exception. The monthly average price for 80-85% average dress boning cows in Kentucky set a record in June and may set a new record in July.

June 2025 prices were 16% higher than June of 2024 and 62% higher than June of 2023. This is a trend across all regions of the U.S. as demand remains strong and cull cow supplies remain tight.

I want to briefly discuss some specific factors behind these prices levels:

The most obvious reason for the extremely high cull cow prices has been sharp reductions in slaughter levels. As I write this in late July, beef cow slaughter is down 17% year-to-date from 2024. If this trend continued through the end of 2025, it would represent a reduction in beef cow slaughter of more than 450,000 cows.

The beef cow herd was culled hard from 2021 to 2023, so it is likely that a lot of poor performers had already exited the herd. And of course, the current calf market is encouraging producers to hold on to cows a bit longer than usual. It is also worth pointing out that dairy cow slaughter is down 7% for the year, which is also contributing to the tight supplies.

Consumer demand has been strong and has probably been overshadowed a bit by discussion of tight supplies. Ground beef represents a significant share of beef consumption, and a large portion of cull cow slaughter is targeted for the ground beef market. It is also likely that high retail prices are pushing some consumers towards lower priced ground beef, as opposed to higher priced cuts. While supply is absolutely a major factor, strong demand has added fuel to the fire.

Finally, there is another element that has not gotten as much attention, but that I consider to be significant. Multiple dynamics have pushed cattle to higher slaughter weights over the last few years and that has led to a substantial increase in quality grades.

For some perspective, 10.6% of cattle graded Prime in 2024 and that percentage is running at about 11.8% thus far in 2025. This increase in marbling also means there is an increase in the amount of fat in the trim, which creates additional demand for lean trim to be used for blending. Since cull cows are a source of lean trim, this has also contributed to strong cull cow markets.

Breaking: Mexican Border Closed Again as New World Screwworm Comes Within 370 Miles of the U.S.

Thu, 10 Jul 2025 02:16:37 GMT

On July 8, Mexico’s National Service of Agro-Alimentary Health, Safety and Quality reported a new case of New World screwworm (NWS) in Ixhuatlan de Madero, Veracruz, Mexico, which is approximately 160 miles northward of the current sterile fly dispersal grid on the eastern side of the country and 370 miles south of the U.S./Mexico border.

This new northward detection comes approximately two months after northern detections were reported in Oaxaca and Veracruz, less than 700 miles away from the U.S. border, which triggered the closure of our ports to Mexican cattle, bison and horses on May 11, 2025 .

While USDA announced a risk-based phased port re-opening strategy for cattle, bison and equine from Mexico beginning as early as July 7, 2025 , this newly reported NWS case raises significant concern about the previously information shared by Mexican officials and severely compromises the outlined port reopening schedule of five ports from July 7 to Sept. 15. Therefore, in order to protect American livestock and the U.S. food supply, Secretary of Agriculture Brooke Rollins has ordered the closure of livestock trade through southern ports of entry effective immediately.

“The United States has promised to be vigilant — and after detecting this new NWS case, we are pausing the planned port reopening’s to further quarantine and target this deadly pest in Mexico. We must see additional progress combatting NWS in Veracruz and other nearby Mexican states in order to reopen livestock ports along the Southern border,” Rollins says. “Thanks to the aggressive monitoring by USDA staff in the U.S. and in Mexico, we have been able to take quick and decisive action to respond to the spread of this deadly pest.”

To ensure the protection of U.S. livestock herds, USDA is holding Mexico accountable by ensuring proactive measures are being taken to maintain a NWS free barrier. This is maintained with stringent animal movement controls, surveillance, trapping and following the proven science to push the NWS barrier south in phases as quickly as possible.

In June, Secretary Rollins launched a 5-point plan to combat NWS by protecting our border at all costs, increasing eradication efforts in Mexico, and increasing readiness. USDA also announced the groundbreaking of a sterile fly dispersal facility in South Texas. This facility will provide a critical contingency capability to disperse sterile flies should a NWS detection be made in the Southern U.S.

Simultaneously, USDA is moving forward with the design process to build a domestic sterile fly production facility to ensure it has the resources to push NWS back to the Darien Gap. USDA is working on these efforts in lockstep with border states – Arizona, New Mexico and Texas – as it will take a coordinated approach with federal, state and local partners to keep this pest at bay and out of the U.S.

USDA will continue to have personnel perform site visits throughout Mexico to ensure the Mexican government has adequate protocols and surveillance in place to combat this pest effectively and efficiently.

Click to enlarge.

(USDA)

Your Next Read: Protect Your Livestock: Signs of New World Screwworm

Understanding Basis: The Biggest Risk in the Cattle Market Today

Thu, 03 Jul 2025 19:55:02 GMT

The dynamics of today’s cattle market is unique and challenging. Key to this challenge is a wide basis spread between cash and futures markets.

“What we have is a big division in our basis,” explains Chris Swift, a commodities broker and founder of Swift Trading Co. “The basis spread tells us where we can buy cattle the cheapest, where we can sell cattle at the most expensive. And right now, it’s a very wide positive basis, suggesting that the cash market is trading considerably higher than the futures.”

Swift joined Chip Flory on “ AgriTalk ” July 3 to discuss the current state of the cattle market.

During the conversation Swift explains the spread is because the cash producers, the ones who actually are cattle producers, have to be in the cattle business. If they are going to be in the business, they have to buy and market cattle, but a futures trader does not have to do either.

“There’s a division between the producer, having to produce at these price levels, whether he wants to or not, and a futures trader going: ‘You know what, I think he may continue to do that, but I don’t have to support it at the same price level.’ And the belief is that were futures to run to the price of the cash market, then every producer would lay off the risk to the futures market.”

Thus, today it is difficult for producers to lay risk off in the futures.

“It’s absolutely horrible,” Swift says. “It creates a basis spread, kind of a tiger trap for which you can’t get out of if you have to sell futures and take on some kind of protection at the lower price levels. You are subject to the futures market again, always settling to the cash of that market.”

Some key market drivers Swift note include:

Supply challenges. He referenced the impact of the Mexican border closure on cattle volume, with a 2% to 5% reduction in Southern inventory. “It’s very interesting how the industry has been able to keep so many cattle on feed,” Swifts adds. “Next year may be the real challenge.”
The resilience of consumer demand. Swift says high prices could eventually impact consumer purchasing.
The trend of heifer retention to maintain herd size rather than expand it. His theory is producers are going to continue to sell heifers at the higher price, and they will hold Bessie back and see how many calves they can actually get out of her.
“Well, that process is now probably coming to an end, where Bessie doesn’t have any more calves in her and she’s going to have to be refreshed. So now we’re starting to hold the heifers back a little bit. We sell the cows off, and we continue to move laterally in our supply issue.”

Industry Outlook

“We are now in a position where one of two things has to happen,” Swift says. “We either shrink production and processing capacity, or we grow the number of animals.”

He says producers have zero signals right now to expand the beef herd and that price rations the number of participants.

“That’s what the market’s doing right now,” he adds. “It is telling the U.S. producer, there’s too many of you out there, we need to reduce this amount.”

The market signals are telling the industry to contract, which Swift says will lead to more vertically integrated supply chains to allow producers to move with less risk of price fluctuation. He referenced Walmart’s strategy of building a supply chain for Angus beef as an example of what the beef world could look like in the next 10 years.

Swift says the question is how bad does a cattle feeder or a backgrounder or anyone in the cattle industry want to be in the cattle business.

“If you want to be in it, you’re going to pay these prices regardless, and you’re going to average them out through the years,” he says. “If you don’t want to be in the business anymore, this is the place to get out. It’s the top of the market for what we know right now, and it’s going to become even more difficult.”

He says smaller producers might struggle to remain competitive as they assume more risks to continue in business. He also predicts high prices will adjust consumer demand, and unfortunately, the industry might not ever see a large increase in the cow herd.

Discussing what producers should expect following the July Fourth holiday, Swift says next week starts the big video sales.

“We will sell as much volume in the next three weeks as we pretty much will for the remainder of the year,” he explains adding that a lot of those cattle won’t be delivered September or October.

Selling on the video markets in July, producers turn their price risk into a physical risk, keeping them alive and getting them up to weight.

Despite the challenges, Swift is optimistic about opportunities in the cattle industry. He encourages young producers who want to start raising cattle to absolutely give it a try.

“There is no better opportunity than a dying business,” he says.

How Can Producers Use LRP

Clay Burtrum from Farm Data Services also joined Flory on “AgriTalk.” He explains how July 1 starts a new crop year for Livestock Risk Protection or LRP.
Bertrum shares some new options for the 2026 crop year.

Unborn calves. “We’ve had unborn calves in the past, but now you can insure unborn calves that you’re going to sell within about a two-week period,” he explains. This option would be for dairy or beef-on-dairy calves.
A 13-week cull cow program for dairy producers.
Insurance on video sale cattle before taking physical possession.
Billing process now delayed to the second month after contract expiration.

Burtrum explains the value of LRP: “It’s like driving your car down the road. You don’t anticipate having a wreck. You want to pay that premium. This is the same kind of concept in the cattle market. We don’t want to wreck in that market, if you don’t pay your premium, you sold your cattle for a higher price. That absorbed that premium, and then you’re continuing to keep yourself bankable, to keep yourself operating for that next year.”

He encourages producers to find an LRP agent who can help walk them through the process and explain the program options.

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Breaking News: Mexican Ports to Reopen in Phases for Cattle Trade Starting July 7

Mon, 30 Jun 2025 21:55:31 GMT

Secretary of Agriculture Brooke Rollins announced today a risk-based phased port re-openings for cattle, bison and equine from Mexico beginning as early as July 7.

The announcement is following the extensive collaboration between USDA–Animal and Plant Health Inspection Service (APHIS) experts and their counterparts in Mexico to increase New World screwworm (NWS) surveillance, detection and eradication efforts. The port reopening timeline is:

Douglas, Ariz. – July 7
Columbus, N.M. – July 14
Santa Teresa, N.M. – July 21
Del Rio, Texas – Aug. 18
Laredo, Texas – Sept. 15

After each reopening, USDA will evaluate to ensure no adverse effects arise.

Progress Being Made to Stop Progress of NWS

According to USDA, progress has been made in several critical areas since the ports were closed on May 11 , including:

Resolution of challenges with conducting flights in Mexico that has allowed the team to consistently conduct sterile NWS fly dispersal seven days each week
Dispersal of more than 100 million flies each week
USDA sent five APHIS teams to visit, observe and gain a deeper understanding of Mexico’s NWS response. The APHIS teams were allowed the opportunity to share feedback.

USDA says there has not been a notable increase in reported NWS cases in Mexico, nor any northward movement of NWS over the past eight weeks.

“At USDA we are focused on fighting the New World screwworm’s advancement in Mexico. We have made good progress with our counterparts in Mexico to increase vital pest surveillance efforts and have boosted sterile fly dispersal efforts. These quick actions by the Trump Administration have improved the conditions to allow the phased reopening of select ports on the Southern Border to livestock trade,” Rollins says. “We are continuing our posture of increased vigilance and will not rest until we are sure this devastating pest will not harm American ranchers.”

The National Cattlemen’s Beef Association (NCBA) says it supports the plan to strategically reopen key ports of entry.

“NCBA and our state affiliates have spent months working with USDA to safeguard the U.S. cattle industry from the threat of New World screwworm. We strongly support USDA’s five-pronged plan to fight the screwworm, which includes bolstering sterile fly production by renovating a facility in Metapa, Mexico, and by building a new fly dispersal facility at Moore Air Base in south Texas,” says NCBA CEO Colin Woodall. “Today’s announcement to reopen key ports of entry is a measured, thoughtful approach by Secretary Rollins to allow some trade while also ensuring the American cattle industry is protected from this pest.”

While the Douglas, Ariz., port presents the lowest risk based upon the geography of Sonora and a long history of effective collaboration between APHIS and Sonora on animal health issues, USDA intends to reopen additional ports in New Mexico, and if it is proven safe to do so, in Texas, over the coming weeks. Additional port openings will be based on APHIS’ continuous reevaluation of the number of cases and potential northward movement of NWS, Mexico’s continued efforts to curb illegal animal movements, and implementation of further rigorous inspection and treatment protocols.

“We trust Secretary Rollins made this decision with the latest information from USDA staff in Mexico, and we know she will continue holding her counterparts in the Mexican government accountable for eradicating screwworm,” Woodall adds. “NCBA and our state affiliate partners will continue working with USDA and key members of Congress to protect the United States from New World screwworm.”

Continuing Efforts

USDA is working with Mexico’s National Department of Health, Food Safety and Food Quality (SENASICA) on outreach, education and training efforts to raise awareness and put producers on high alert about NWS, along with utilizing their well-functioning central laboratory for diagnosing cases. While Mexico has made great progress on animal movement controls and surveillance, additional progress will help ensure the remaining U.S. ports reopen. Enhanced animal movement controls to stem illegal animal movements from the south, along with robust surveillance and NWS risk mitigations beyond check points will be critical in pushing back NWS. APHIS technical teams continue to engage with SENASICA to improve the overall NWS posture in Mexico and implement the rigorous steps needed to keep this pest away from our border.

Mexico will also begin renovation of its sterile fruit fly facility in Metapa this week, with renovation expected to be completed by July 2026. Renovation of this facility will allow for production of between 60-100 million sterile NWS flies each week. This is a critical step towards reaching the goal of producing the estimated 400-500 million flies each week needed to re-establish the NWS barrier at the Darien Gap.

Only cattle and bison, born and raised in Sonora or Chihuahua, or that are treated according to cattle and bison NWS protocol when entering these states, will be eligible for import. See Importing Live Cattle and Bison From Mexico to the United States for more information on cattle and bison import requirements.

In addition, reopening the Del Rio (Aug. 18) and Colombia Bridge (Sept.15) ports will be contingent on Coahuila and Nuevo Leon adopting the same NWS protocols for cattle and bison as those now required of Sonora and Chihuahua for cattle or bison entering those states.

Equine may import from anywhere in Mexico. They require a seven-day quarantine at the port of entry and must import in accordance with the equine NWS protocol and other requirements detailed on USDA APHIS | Import Horses from Mexico webpage . Approved equine facilities are available at the Santa Teresa, N.M., port and will be available for entry of horses when that port is reopened.

In May 2025, USDA suspended imports of live cattle, bison, and equines from Mexico into the U.S. due to the continued and rapid northward spread of NWS. During the weeks of June 2 and June 16, teams of APHIS experts conducted robust onsite assessments of Mexico’s NWS response efforts to fully reassess the risk of NWS incursions to the U.S. posed by importation of Mexican cattle across our southern border.

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Under Contract: Future of the Oklahoma National Stockyards Remains Optimistic

Tue, 06 May 2025 12:15:54 GMT

One of the largest livestock auctions in the country, the Oklahoma National Stockyards (ONSY), has been placed under contract for purchase by a group of investors, according to a release.

The buyer group, led by Oklahoma farmer, rancher and cattle feeder, Chris Franklin, plans to ensure continued operation of the livestock market with possible development of adjoining properties. Around 350,000 head of feeder cattle flow through the auction annually, averaging 7,000 to 8,000 head per week and has been a major contributor to the livestock industry in the region for more than 100 years.

“We are excited about this new chapter for the Oklahoma National Stockyards,” Franklin shared in a statement. “Our focus remains on supporting our customers, preserving the stockyards’ vital role in Oklahoma’s and the nation’s agricultural economy, and fostering a thriving marketplace for the livestock industry.”

ONSY is a publicly traded company with the majority of the shares held by members of the same family. Without any heirs interested in operating the facility, it was offered for sale in the fall of 2024 in hopes of finding a buyer committed to continuing on the legacy of the stockyards since its inception in 1910.

Jerry Reynolds, president of ONSY, says a lot still has to happen before the purchase would be finalized. The closing date has been set for October and could be extended, but producers can expect the same service the auction has always offered customers.

“It’s business as usual,” he says. “Until there’s a need for something to transition or change, customers can have the assurance to show up every week we have a sale and our commission firms are going to work to get the best value they can. We are seeing record prices and a phenomenal market.”

ONSY continues to operate with nine commission companies representing the cattle with sales held year-round.

(Chloe Reid)

Ben Hale, owner of Western Livestock Commission Company and president of the Oklahoma City Livestock Exchange, says he is optimistic about the future of the ONSY after meeting with Franklin.

“It’s an honor for our team at Western to play a role in preserving such a historic market,” he shared on social media. “There’s still work ahead, but we’re committed to seeing it through — for the good of our industry and everyone it serves.”

Western Livestock Commission Company is one of nine commission companies representing cattle at the stockyards, which is a unique business structure compared to other livestock auctions around the country.

“It’s the only one that I know of in the country, and it really speaks to the history of Oklahoma National Stockyards because as long as it continues to operate, it is technically the only remaining of the original terminal cattle markets in the country,” says Derrell Peel, Oklahoma State University extension livestock marketing specialist.

Future plans
The buyer group says it’s committed to maintaining ONSY’s legacy of excellence and plans to actively engage with leading agricultural organizations in Oklahoma, including the Farm Bureau, Oklahoma Cattlemen’s Association, American Farmers and Ranchers, and the Oklahoma Department of Agriculture, to strengthen partnerships and support the state’s agricultural ecosystem, according to the statement.

Peel is hopeful the auction will continue into the future, but says it will face challenges, including with water, urban pressure and facility improvements to make.

“They are located right at the edge of Oklahoma City, and have faced increasing challenges over the years because of that location,” he says. “The city’s grown up around them. They’re sitting right next to the Oklahoma River. It’s a very expensive place to operate, and their facilities are not new. They’ve got continuing needs for reinvestment if they’re going to continue to operate as an auction.”

Until 1961, livestock sales were handled only by private agreement or treaty between the seller and buyer through the services of the on-premises commission companies.

(ONSY)

History of the stockyards
Historically, packing plants were in areas with terminal markets located next to them where producers brought in cattle and consigned them for sale private treaty and were represented by commission companies. Chicago, Kansas City and Denver all had terminal livestock markets, which have been closed for decades.

“In the early 1960s it switched to a livestock auction, but the commission companies continue to be the ones that represent all the cattle that go through there,” Peel explains. “Oklahoma National doesn’t represent any cattle. They own the facilities, provide the auctioneer and run the sales.”

Cattlemen consigning to Oklahoma National choose one of the nine companies to represent their cattle in the sale.

“Each company has its list of customers, they bring cattle in, taking turns selling them,” Peel explains. “They start every week and each one of them sells so many pens of cattle, rotating through and repeating the list until everybody’s sold out of cattle. It’s a very unique setup, but it really speaks to the history and the legacy of Oklahoma National as the last remaining terminal market in the country.”

Business as usual
Hale and Reynolds admit numbers were down in April, but that was likely weather related as Oklahoma has seen record rainfall for this time of year. They both noted cattlemen were having a harder time getting cattle out, but there are lots of cattle ready to be sold.

Cattle auctions are held Monday and Tuesday each week.

(ONSY)

“What makes a good sale barn is having a good amount of cows and calves to sell, and you got to have yearlings to sell,” Hale says. “With that you have a year round market. That’s what we have. We sell a lot of calves off the cow, and we sell a lot of yearlings off grass and wheat. We stay pretty consistent year round. It sits on I-35, I-40 and I-44 so it’s easy to get to.”

The impact the stockyards is not only felt by producers, but the city benefits economically as well. Hale notes the area is extremely busy Sunday through Tuesday with sales of fuel, hotels and shopping.

“There’s even the tire shop down here on the south end of town where we’re at, which is extremely busy on Monday and Tuesday,” Hale says. “There’s also lots of shopping that takes place. It’s a lot of people coming in every week and would be millions of dollars that it brings in throughout the year.”

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Market Dynamics Create the Perfect Storm for Cattle Prices

Fri, 11 Apr 2025 20:36:54 GMT

As a cattle feeder and commodity broker for 45 years, Brad Kooima of Kooima Kooima Varilek in Sioux Center, Iowa, says he’s never seen a time like this, or even a close second, in the cattle market.

“I also know either you adapt or you get run over,” Kooima says. “I think we have to embrace the idea there’s going to be a lot of volatility.”

He encourages producers to figure out a way to use the extreme volatility to their advantage.

“Don’t forget, you can sell options,” he explains. “These deep-out-of-the-money calls are worth a lot of money.”

Feeder Cattle Migrate North
Cattle-on-feed numbers for the last year and a half have transitioned to Iowa and Nebraska at the expense of Texas and Kansas. Kooima credits the ethanol industry for supporting cattle feeding and dairies, thus impacting the markets.

“The ability to feed the byproduct has made [Iowa] extremely competitive when it compares to places in Texas and Kansas,” he explains. “It’s not unusual for the basis here to be anywhere from 70¢ to 90¢ better, just on corn. When you throw in that dynamic of the DDGs, and the ability to feed the byproduct here, it’s real.”

The lower cost of gains has contributed to the northern migration of cattle on feed as well as negotiated trade.

“I’m a big proponent and a big believer that it’s very important to maintain at least a certain percentage of negotiated trade,” Kooima said during a recent conversation with Chip Flory on AgriTalk.

“We’ve seen a consistent premium in the north ... but when you’ve got leverage, which is what we’ve had [in Iowa] for a long time, I believe the cash negotiator is going to get more money,” he explains.

In recent months, the shift in cattle on feed has accelerated because of the Mexico border closing and screw worms.

Kooima also points out there is an 87% correlation between the cattle futures and the stock market. The only commodity that is higher is crude oil.

He explains cattle are lower when the stock market breaks because of inflation, recession or an economic slowdown.

“Beef demand is viewed as being elastic, a discretionary purchase,” he says.

Short term Kooima says there will be more uncertainty in the cattle market.

“Be careful,” he summarizes. “I’m a supply side fundamentalist guy, too, and where I sit, we don’t have a lot of cattle. We don’t hardly have any cattle ready right now. In a few weeks, there’s a tremendous chance to rally this thing going into May, but I worry the uncertainty might take a little longer than that, and Washington, D.C., can pivot at a moment’s notice.”

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CAB Insider: Market Update April 9

Wed, 09 Apr 2025 19:18:52 GMT

Last week’s 591,000 head federally inspected cattle harvest was 18,000 head smaller than the week prior and 23,000 head smaller than a year ago. With that said, the production volume trend is positive, with a two-week average of 600,000 head per week compared to the prior two weeks, averaging just 571,000 head.

Broad economic turbulence on the heels of tariff announcements set equities in a tailspin beginning last Wednesday. Concerns for domestic beef demand and global implications to beef trade spilled over into Live Cattle futures with a four-day slide devaluing these contracts multiple dollars. Tuesday’s April ‘25 Live Cattle contract was valued $10/cwt. cheaper than last week’s spot fed cattle average price.

(UrnerBarry)

Wholesale boxed beef values were sharply higher last week with the Choice cutout leading the way, posting an increase of $10.24/cwt. in Urner Barry’s weekly average. The Certified Angus Beef ® (CAB®) brand cutout increased by $3.57/cwt., cutting the brand’s premium over Choice to $14.84/cwt. Select carcasses, at just 12.6% of the fed cattle mix, increased by $4.77/cwt., widening the Choice-Select spread to a massive $24.70/cwt. in Urner Barry’s average weekly comparison. Early this week the USDA reported the Choice-Select spread at $15/cwt in the weighted average pricing.

Recent trends have tracked middle meats and grinds driving most cutout gains. Buyers are preparing for spring holiday and grilling demand as ribeye prices have posted sharply higher since early March. Short loin, strip loin and sirloin values are increasing with similar seasonal demand, with sirloins the most inflated versus a year ago.

Chuck and round items are certainly not seeing price weakness but compared to the middle meats are in a more subdued pattern. This applies to most items except for the leaner round knuckles, eye of rounds and insides, each of which are seeing strong pricing. Thin meats and briskets are trading at values within expectation for this season and compared to recent annual patterns.

Robust Quality Supply and Demand
A wild week in economic news and equity markets rapidly transitioning to lower values has logically created a degree of uncertainty surrounding beef. However, a look at fed cattle beef production and recent price activity show promise.

The 2025 fed cattle harvest has run very close to a year ago with the full production weeks averaging 473,000 head, a 1,600 head increase over the same period last year. This may surprise some due to the fact that the cull cow and bull harvest has been dramatically lower again this year, down 14.7%, pulling total federally inspected harvest counts lower by 2.4%.

Fed steer and heifer carcass weights have averaged 32 lb. heavier than a year ago and 43 lb. heavier than 2023. Just comparing this year to last, the carcass weight increase is equivalent to adding 16,470 fed cattle to the weekly harvest, a 3.5% increase.

(CAB)

That fed cattle tonnage advance stands in contrast to the more readily understood theme of tighter fed cattle supplies. While we know that feedlot inventories and placement patterns indicate smaller head counts near term, the net carcass tonnage is shockingly large.

Combined Choice and Prime quality grade percentages recently touched a record-high 86.5% of fed cattle carcasses. USDA Prime has been the driver with the year-to-date number at 11% of fed cattle compared to 10% a year ago. Heavier carcass weights and the one percentage point increase in the Prime carcass share have netted a 10.8% increase in total Prime carcass tonnage. Even so, the Prime cutout premium over Choice has run 65% wider than a year ago in the last 14 weeks.

In contrast, CAB carcass tonnage has totaled 1% smaller than a year ago in the latest 10-week period. The brand’s cutout premium over Choice has averaged 16% greater on roughly the same weekly production volume for the period verus a year ago.

These supply and price metrics paint a picture of robust demand for premium-quality beef in an economic setting that has been quite inflationary over a handful of years. Consumer dollars are undoubtedly stretched and concerns over domestic and international demand are rightfully befalling cattle futures prices. Yet this snapshot suggests that recent demand patterns cast a vote in favor of the beef sector continuing a path of quality in relatively large volume rather than relying on scarcity alone as a profit driver.

Beef Profit Tracker: Cattle Feeding Margins Continue Sharp Upward Momentum

Wed, 26 Mar 2025 22:35:36 GMT

Cattle feeding margins continued their sharp upward momentum as breakeven prices for current closeouts hover in the $170 range against a negotiated cash steer price averaging $212/cwt for the week ending March 22. The margin estimate for the week was $612/hd. compared to $43/hd. a year ago. The current breakeven price in the $170s/cwt compares to $200/cwt for currently placed cattle. Last week’s feeder cattle price averaged $287.33/cwt compared to $240.39/cwt for feeder steers when last week’s marketed cattle were placed on feed in August 2024.

Packer margins remain well in the red as fed cattle prices remain strong as the beef composite cutout value gains additional strength to averaging nearly $327/cwt. compared to $316/cwt a year earlier.

View the full Sterling Beef Profit Tracker for the week ending March 22.

The Beef and Pork Profit Trackers are calculated by Sterling Marketing, Vale, Ore.

(Note: The Sterling Beef Profit Tracker calculates an average beef cutout value for the week in its estimates for feedyard and packer margins. Other prices in the weekly Profit Tracker also are calculated weekly averages. Feedyard margins are calculated on a cash basis only with no adjustment for risk management practices. The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs. Sterling Marketing is a private, independent beef and pork consulting firm not associated with any packing company or livestock feeding enterprise.)

CAB Insider: Market Update March 12, 2025

Wed, 12 Mar 2025 19:30:54 GMT

Total beef cattle harvest last week was up 12,000 head from the prior week at 578,000 head, 6,000 head fewer than the same week last year. In the past three years, federally inspected cattle harvest has increased from March 1 through the middle of June. This corresponds with increasing beef demand as grilling season develops. As we’re just ahead of St. Patrick’s Day, there are a number of weeks ahead before spring demand begins in earnest.

Spot fed cattle prices remained unchanged through most of the week but Friday’s trade sparked values higher. The summary for the week featured live prices in the north at $200 to $202/cwt. and $315/cwt. dressed. The southern market traded primarily at $197/cwt., culminating in a 5-area weighted average of $199.97/cwt.

Carcass weights made a significant turnaround in latest confirmed data for the week of February 17. Steer carcasses averaged 949 lb., a 9 lb. decline on the week, while heifers dropped 10 lb. to average 866 lb. Extreme cold and precipitation were likely the primary contributors to the decline. Combined steer and heifer carcass weights are down 37 lb. year to date.

(UrnerBarry)

Urner Barry cutout values indicate lower prices last week. But, USDA weighted average prices noted slightly higher prices, up just over $1/cwt. on average. Earlier this week prices continued to drift higher, confirming the short term turnaround.

Carcass quality trends are on the uptick, with historical expectations to see marbling trends top out for the year this month. The latest USDA Choice percentage is 73%, just half a point below a year ago, while USDA Prime is fractionally higher than a year ago at 10.9% of fed steers and heifers.

The proportion of Angus-type carcasses qualifying for the brand has been up and down in 2025. Yet as expected, CAB qualification has been trending higher within seasonal patterns. Similar to annual quality grade trends, the brand’s acceptance rate tends to find the annual high in March each year. With the brand’s 43% acceptance rate marking a new all-time record, the latest highlight in production trends rounds out February.

Chuck and Round Cutout Contribution
When we talk about highly marbled Certified Angus Beef ® brand beef cuts, we typically think ribeyes, tenderloins and strip steaks. These are among a class of beef cuts that enjoy the limelight and capture tremendous consumer demand. As well, these cuts enjoy the largest premium markups of any subprimal from USDA Select up through USDA Choice, Premium Choice CAB® and CAB® Prime.

In the past two years the chuck and round carcass primals have edged their way upward relative to their contribution to total carcass value. One of the primary reasons for this is the decline in domestic supply of lean grinding beef from cull cows. In 2022, U.S. cow harvest reached a peak for the cycle as drought pushed producers to send cows to town in volume. The culling trend continued and the declining cow inventory pulled total weekly cow slaughter 21% smaller in 2024 than that of 2022. This was one major factor pushing 90% lean grinding beef prices up 26.5% over the two-year period.

In 2024, average wholesale and retail beef prices saw net increases across all quality grade and brand classes. Yet the contribution to total carcass value from each of the primals shifted around the carcass in response to tighter lean ground beef supplies. That condition remains a factor in the current market as chuck shoulder clods and round knuckles, for instance, show continued price strength.

In the fed cattle supply this is not just a phenomenon reserved for the leaner, USDA Select grade carcasses. The 2024 Certified Angus Beef ® brand cutout trend featured the loin primal contributing 27.8% of the total carcass value, slightly less than the 29.5% contribution in 2023. The rib primal similarly pulled back from 19.1% in 2023 to 18.2% of value contribution last year. Picking up the slack in 2024, the CAB chuck primal contribution increased to 24.9% of total value, a 1.7 point increase. The CAB round primal increased nearly the same as the chuck, up 1.4 points to average 18.4% of total carcass value last year.

(CAB)

This trend is not necessarily an indication of poor middle meat demand, rather it’s a reflection of a slight uptick in demand for end meats that are lean enough to be used as substitutions for grinders. These shifts aren’t expected to be permanent but are more likely to remain in place as long as domestic cow harvest remains historically low.

Carcass premiums garnered through the Certified Angus Beef ® brand continue to extend their reach across the entire carcass. The premium derived from the CAB chuck moved up to $13.52/cwt. above USDA Choice in 2024, a $3.86/cwt. increase in two years. The CAB round premium was $9.01/cwt. over Choice last year, $1.46/cwt. higher than the prior year but similar to the spread observed in 2022. Comparatively, the Choice-Select price spread for the chuck was $2.44/cwt in 2024. with the price spread for the round primal at $2.57/cwt.

CAB Insider: Market Update Feb. 26, 2025

Wed, 26 Feb 2025 22:23:30 GMT

Total beef cattle harvest last week was slightly larger than the prior week at 563,000 head, an increase of 2,000 head. Cull cow processing was the laggard with winter weather impacting movement of cattle, resulting in cow harvest pulling back 8.9% from the week before.

(Urner Barry)

Spot-market prices for fed steers and heifers remained under pressure last week with Live Cattle futures contracts on the Chicago Mercantile Exchange continuing to lead the cash market lower. Further pressure on cattle prices traces to lower boxed beef values that persist despite the smaller harvest volume and tighter supplies. Firming prices in Live Cattle futures early this week brought an end to the multi-day downward correction from recent record highs. The April contract remains a $3.63/cwt. discount to the February contract, signaling weaker fed cattle market expectations by traders near term.

The Feb. 1 Cattle on Feed report, issued last Friday, contained no surprises relative to analysts’ earlier forecasts. The number of cattle in feedyards with 1,000 head or larger capacity was 11.7 million, 99% of a year ago, on February 1. The head count placed in feedyards through January was 102% of the number placed in January 2024, a blizzard-stricken month in cattle feeding regions that resulted in a record-low placement number for that period last year.

Combined Choice and Prime quality grade rates are even with a year ago with a slightly higher USDA Prime grade recently at 10.8% of fed cattle and USDA Choice slightly lower at 72.9% of total. The Certified Angus Beef ® brand acceptance rate has ranged slightly above and below a year ago in recent weeks, averaging near 38% of carcasses from Angus-influenced cattle meeting all 10 of the brand’s quality specifications.

CAB Drives Brand Relevance With Specification Update
Evolution of cattle type, management technology and production economics continue to shape the beef business. As a pioneer in the branded beef space, the Certified Angus Beef® brand has remained relevant throughout the supply chain via continued innovation.

Effective the first week of March, the brand will modify its ribeye area (REA) specification from the current 10 to 16 square inch acceptable range to include carcasses wth ribeyes measuring up to 17 square inches.

Innovating to drive industry relevance has been a focus of Certified Angus Beef since it’s inception. For instance, in 2007 the brand transitioned from the “yield grade of 3.9 or leaner” standard to specifications for each of the yield grade component traits, including carcass weight, REA and backfat thickness.

Adapting to increasing fed cattle finished weights generated incremental shifts in the brand’s upper hot carcass weight (HCW) limit in 2014 and 2022. While heavier carcasses have inevitably resulted in larger beef cut sizes, we have been purposefully slower in modifying the REA specification until now.

In the past three years, our packing partners have shared data with us on six million carcasses, allowing us to evaluate marbling, fat thickness, REA and HCW—tracking seasonal effects and overall industry trends. The data reveals that, since shifting our maximum HCW 50 lb., up to 1,100 lb. in 2022, the proportion of carcasses excluded from CAB certification due to excessive REA size has increased by 30%. This means that in 2024, ribeye size has been the reason carcasses don’t qualify in 20% of the cases where Angus-eligible carcasses fail to meet brand standards.

(CAB)

Increasing the REA target by an inch represents a subtle shift in the distribution of ribeye sizes across all CAB carcasses. Data on more than two million carcasses in 2024 shows that just 7.4% of the brand’s certified carcasses would have fallen within the range of 16.1 to 17.0 square inches. As well, the shift will have little impact on middle meat steak thickness. The difference from a 12 oz. center-cut strip steak will vary less than one tenth of an inch between carcasses measuring a 16.1 inch ribeye versus a 17.0 inch ribeye. (Schiefelbein et. al., Colorado State University 2024)

It’s this research and examination that have culminated into the decision to further evolve the brand’s standards with this adjustment. As total fed cattle supplies trend lower in the short term, this move will positively impact everyone in the brand’s supply chain, alleviating some downstream supply pressure.

From a cattlemen’s view, the shift embraces current, and most likely future, production trends. It is not a directive toward larger cattle, rather a logical shift to sharpen the brand’s relevance in response to the evolving cattle population.

Increasingly important carcass-based cattle values will reward a few more of the highest quality carcasses previously constrained by ribeye size, especially those near the upper end of the allowable weight limit. It’s also important that producers realize that insufficient marbling is easily the primary reason that Angus-type carcasses are unsuccessful in meeting CAB specifications, with 82% of failures owing to that reason alone in 2024.

Buckle Up: Here's Why Cattle Prices Are Setting Up for Another Wild Ride in 2025

Fri, 07 Feb 2025 21:19:50 GMT

The cattle markets hit historic highs again to start 2025, and as USDA’s latest Cattle Inventory report showed U.S. beef cattle inventory fell to the lowest level in 64 years , tight supplies and strong demand could push cattle prices to even higher highs in 2025.

USDA’s annual Cattle Inventory Report released Friday shows the U.S. total cattle inventory shrunk another 1% over the past year, with the number of beef cows also down 1%.

Those numbers, along with questions around just how much higher these markets can go, were major topics surrounding the 2025 CattleCon in San Antonio, Texas, (the annual cattle industry convention) this past week.

Signs of a Slowdown?
Economists and market analysts knew the cattle herd was still shrinking, even before the report was released last week. But economists say there are some signs starting to signal that is slowing down.

“We certainly got smaller in 2024. That was actually kind of obvious about a year ago when you looked at heifer numbers,” said Derrell Peel, Oklahoma State University Extension livestock specialist. “If you look at the heifer numbers in this report, we don’t have a lot. And so we’re going to be challenged going forward to stop this liquidation. I think we might stabilize numbers this year, but I think growth is pretty much a long shot at this point.”

“I think we’re getting close to the bottom, as Darrell referenced,” said Don Close, senior animal protein analyst for Terrain, during the U.S. Farm Report live taping at NCBA’s annual convention. “I think the challenge is retaining enough heifers out of the supply that we have to provide the fuel for the build back.”

Calf Crop Was a Big Surprise
Casey Mabry, with Blue Reef Agri-Marketing, said there actually was a surprise in the latest cattle inventory report, and that wasn’t with heifer numbers.

“The biggest surprise to me was really looking at the total calf crop report, because we’re looking at the total cow inventory numbers. I think that probably caught some people off guard, having the calf crop a little bit bigger than what most people’s expectations were,” said Mabry.

Incentives Drive Outcome
With cash cattle hitting records to start 2025 a question on almost everyone’s mind is, can it continue? Mabry said it really depends on if demand can remain steady, since the supply side will remain tight.

“Incentives drive outcome and obviously with grain prices as cheap as they’ve been, and cattle prices as high as they’ve been, we’ve held on to some cattle. So it’s kept the front end of the market really, really tight and it’s kept packers chasing after cattle. So that ran the market $10 or $15 higher, in my opinion, than what we should have on the front end,” said Mabry. “So, it’s going to be really interesting to watch as we go through the back end of this thing. We’ve probably got to work through some stuff right here on the front end. But if the analysts continue to say we’re going to be tighter and demand stays pretty good, we’ll probably see prices exceed where we were before.”

“We’re Still Bullish”
Peel reminds producers there’s a great deal of risk in these markets. He said the markets don’t like uncertainty. With trade concerns and tariff threats, combined with a strong U.S. dollar, the combination is throwing uncertainty into the market.

“We’re very bullish and still bullish in general going forward for average prices,” said Peel. “But we also know that we’re subject to a lot of shocks right now. We’ve seen a couple already. We’re certainly vulnerable. There’s a lot of air below us since this market is so high. So producers really need to still do that risk management. Producers need to think about those marketing windows. If you got caught in a shock in one of those, it could really be devastating to you.”

Close has similar advice. He said with the development of insurance products, plus futures and options contracting, there are several ways for producers to manage risk today.

“At the price level we’re at, and just any measured retracement in the market, it could take you out of the game. At these price levels, it is absolutely imperative to have some kind of price risk management program in place,” said Close.

“I think you just need to run with what I call a keen sense of paranoia,” said Mabry. “I mean, be bullish, be excited about the market, but don’t get overly euphoric. We’ve got to remember back a short three or four years ago, we were all in the doldrums and very scared. And there’s a lot of people that were telling their kids to get into a different business. And now all of a sudden, we’re all jumping on the bandwagon of cattle and getting excited about this. So, we want to make sure that you guys are running your businesses like businesses and not gambling on cattle.”

Your Next Read:

Are More Record Cattle Prices Ahead in 2025?

CAB Insider: Market Update Jan. 29, 2025

Thu, 30 Jan 2025 00:16:12 GMT

The past two weeks have brought about further escalation of record-high January fed cattle prices. In the five-area reporting regions Nebraska and Iowa/Minnesota were, once again, the highlights with last week averages just over $210/cwt. These regions also reported the bulk of the negotiated fed cattle trade volume. Kansas feedyards sold just near 7,500 head last week in the negotiated market at $202/cwt. with the Texas/Oklamoma/New Mexico region trading just 1,690 head at $201/cwt.

(UrnerBarry)

The supply of harvested cattle remained fairly tight as the weekly total slipped down to 599,000 head, a 4,000 decline on the week prior. The fed steer and heifer portion of weekly harvest head counts have been very near those of a year ago in the past two weeks while cull cow throughput has been 12% smaller than a year ago.

Live Cattle and Feeder Cattle futures prices have been forced higher as Live Cattle contracts had been lagging negotiated values until recent days.

Boxed beef pricing in the past week saw prices in an up-and-down trend with the overall theme this month showing a rapidly higher adjustment to carcass cutout values.

Quality price spreads are narrowing in seasonally appropriate fashion with middle meat demand fading from fourth quarter highs. Even so, supplies of steak items and briskets are more head-count dependent than end meats, which benefit greatly from heavy carcass weights. As such, quality price spreads may be more sensitive as smaller fed cattle head counts are realized in 2025.

New records in carcass weights are currently being recorded, suggesting that quality grades will remain quite rich for the time being. The likelihood of this is only going to increase as we move toward expected annual quality grade highs in March.

Seasonal Shifts in Beef Item Demand
Carcass cutout values are calculated using the weighted price of each subprimal beef cut, summarized in a single price per hundredweight for the entire carcass. Seasonal demand shifts for different cuts constantly change the percentage of total carcass value that each cut represents. Often those changes are subtle, but January is typically characterized by more dramatic adjustments with contribution from several cuts shifting total carcass value.

(CAB)

As the name suggests, the “comprehensive cutout” value is a simplified single price for fed steer and heifer carcasses combining prices for all quality grades and product delivery periods. So far this month the comprehensive cutout has averaged $326/cwt., a 14% increase for the same period a year ago.

The expected rapid decline in key middle meat prices has taken shape this month with CAB ribeyes dropping $4.38/lb., down 28%. Tenderloins are priced $2.53/lb. cheaper since January 1, down 16%. Perhaps surprising to many, wholesale tenderloin prices are $2.53/lb. cheaper than a year ago. The other popular middle meat steak and roasting cut, the 0x1 strip loin, is slightly less favored for December holidays and consequently has begun the last three years at just 92% of it’s annual average price. The upswing for strip loin demand has begun ahead of Valentine’s Day, with the smaller volume spot market buyers capitalizing on lower prices for this cut relative to the other two premium middle meats.

Just as two featured middle meats are retreating to lower prices, sharply higher values for chuck and round cuts are generating all of the upward pressure for total carcass cutout values. While consumers tend to shift demand to cheaper end roasting cuts after Christmas, the market has been sharply higher on several end cuts. One example from the chuck includes CAB shoulder clod roasts up 18% this month; typically January only increased 4% in the last three years. Prices on round cuts have risen faster this month than those from the chuck with the total CAB round cutout up 17.8% so far.

We’ve highlighted the importance of ground beef pricing for several months, given the much smaller domestic cull cow harvest. This remains a driving factor for fed cattle carcass values as grinding material from the younger cattle supply replaces a portion of the more typical source of lean cow beef.

January ground beef demand tends to increase as consumers look for lower priced proteins. The upcoming Super Bowl is also often cited as a ground beef demand driver, although chicken wings capture the limelight for the event. Wholesale prices for 85% lean ground beef are already up 20% this month, with CAB ground chuck and round each quoted from 10% to 15% higher.

With dressed fed cattle prices and the Choice carcass cutout value both very near $3.33/lb., the packer margin position is dismal. Rising input costs are typically followed by increased product pricing. However, the recent upward price trajectory of what we’d typically call “cheaper” end meats has already been eye-watering. As wonderful as beef demand has been in recent months, the near-term market leaves much to question.

Cattle and Beef Markets Charge into 2025

Tue, 28 Jan 2025 15:32:45 GMT

Cattle and beef markets rocketed out of the gate coming into 2025. With no post-holiday wavering, all cattle and beef markets moved higher in the first half of January – setting new record price levels to start the new year. This continues the trend of the last three years. Cattle prices began to move higher after 2021 and increased more sharply in 2023-2024.

In Oklahoma auctions in the week ending Jan. 17, 2025, the price of 500-pound steers (M/L, #1) was $361.88/cwt., up 18.1% year over year and up 111.1% from the same week four years ago in 2021. For 800-pound steers, the price was $269.07/cwt., up 21.0 percent year over year and up 105.1 percent in the last four years. The U.S. calf crop peaked cyclically in 2018 at 36.3 million head and decreased for the last six years to a projected 33.1 million head in 2024.

(Peel)

Fig. 1 shows the average volume of stocker and feeder receipts including the general downtrend since the recent peak in early 2019 and indicates a continued tightening of cattle numbers.

The 5-market fed steer live price was $203.56/cwt. for the week ending Jan. 17, up 17.3 percent from one year ago and up 85.9% from January 2021. Daily 5-market fed steer prices hit $200/cwt. for the first time ever on Jan. 7 and reached as high as $205.37/cwt. on Jan. 15. Higher fed prices are expected ahead.

The Oklahoma price of average dressing Boning cull cows was $124.31/cwt. last week, up 21.1 percent from one year ago and up 149.5 percent from the same week in 2021. Cull cow prices last week ranged from $136.82/cwt. for high dressing Breaker cows to $110.09/cwt. for low dressing Lean cows.

The weekly Choice boxed beef price for mid-January was $333.51/cwt., up 17.7 percent year over year and up 58.2 percent over 2021 levels. The rib primal price last week was $508.06/cwt., up 2.4 percent year over year and up 50.2 percent from the same week in 2021. The latest loin primal price was $393.99/cwt., up 4.9 percent over last year and up 49.7 percent from 2021. The end meats are stronger relative to the middle meats, with the chuck primal price last week at $303.91/cwt., up 33.2 percent year over year and up 60.5% since 2021. The round primal price currently is $302.66/cwt., up 36.1 percent from one year ago and up 65.9% from 2021.

The strong cattle and beef price trend coming into 2025 is expected to continue as cattle inventories and beef supplies tighten further in the coming months. However, while cattle and beef markets are very strong internally, external shocks from political uncertainty along with U.S. and global macroeconomic jitters may cause short-term shocks and short-lived market setbacks. Volatility is likely to accompany a bullish market expectation.

Derrell Peel, OSU Extension livestock marketing specialist, discusses how the markets have reacted to highly pathogenic avian influenza and questions when herd rebuilding will begin on SunUpTV from Jan. 11, 2025 at

CAB Insider: Market Update Jan. 15, 2025

Thu, 16 Jan 2025 16:18:14 GMT

Now in mid-January, the cattle markets are showing exceptional optimism. Packers were actively bidding to capture spot market needs.

(CAB/UrnerBarry)

Record-high fed cattle prices have been ratcheting up in each of the past weeks. Last week’s trade in the north saw Iowa and Nebraska averages at $203/cwt. while Kansas and Texas feedyards sold for $200 to $201/cwt.

Weekly federally inspected harvest volume moved up to 589,000 head last week after two holiday weeks pulled head counts lower. While last week’s total was 44,000 head larger than a year ago, it’s important to note that the same week in 2024 was uncharacteristically impaired by winter storms.

Paul Dykstra

Historically, January fed cattle prices trend sideways through the first half of the month and then trend slightly upward in the second half of the month. Yet, the strong uptrend so far this year potentially limits immediate sizeable gains at the new levels. Feedyards are optimistically offering cattle at higher values to start the week.

On the boxed beef side of the supply chain, inventories have been curtailed on smaller throughput. This has allowed packers to push spot market prices higher in an attempt to shore up their sales revenues with rapidly rising cattle costs.

January is a month not typified by strong beef demand, as U.S. consumers tend to rein in purchases following Christmas spending. However, limited supply of unsold product at the wholesale level forces prices higher for retail end users. With a total rise of 6.8% for the period, cutout values have been swiftly increasing since mid-November. Prices were set lower for the single week of the Christmas holiday but roared back again to continue a very strong December trend.

The seasonal shift away from rib and tenderloin demand has set in with both items racing to lower prices. Wholesale CAB tenderloins are now $4.00/lb. cheaper than mid-December, a 22% drop.

On the other hand, both ends of the carcass are currently showing price surges with too many highlight cuts to mention. One such cut, the shoulder clod, is currently priced 10% higher than previous historic highs–with the exception of the 2020 backlog. Grinds are sharply higher with typical January demand increases beginning earlier this year, soaring on short lean grinding material supply.

2024 Regional Premiums and Discounts
Launched in early August 2024, the USDA’s Live Cattle Mandatory Reporting dashboard is still a relatively new tool. The purpose of the web platform is to keep market participants informed of trends in price distribution across regions and between differing quality and yield classes of cattle.

Summarizing 2024 dashboard data confirms grade trends across the five major feeding regions in the country. For a few decades USDA has reported quality grades for the largest volume grading states (Nebraska, Kansas and Texas) and broader regional data covering the nation. Over the years, this information has shaped our understanding of grading trends across regions and how cattle type and management affects quality and yield grade.

(CAB)

A brief summation of data describes the most northern cattle with greater marbling and higher quality grade outcomes, but with typically poorer average yield grades. The most southern fed cattle represent the other end of the spectrum with less marbling and lower quality grade outcomes–but more cutability and leaner yield grades.

While these are not newsworthy revelations, what is interesting about the USDA dashboard is that prices for both quality and yield grades across the regions are the focus of the information. Consequently we can somewhat deduce varying degrees of carcass quality and yield through premiums and discounts for those traits, rather than just using grading percentages.

The information is possibly much more meaningful to cattlemen when financial outcomes are tied to grading outcomes. It’s easy to see in the table that, just as suggested, the higher marbling cattle in the North achieved a much greater average premium than cattle in the South. It is also clear that smaller average quality discounts, when applied, were achieved in the North and larger discounts in the South.

On the yield grade side of the ledger, the expected advantage was held by more southern cattle with larger premiums and smaller discounts. The northern cattle saw larger average yield grade discounts and smaller average premiums.

Quality grade price spreads tend to be much larger than price differences between yield grades. This results from consumer demand for quality spiking to often exceptional levels when spring grilling demand heats up and again in the fourth quarter before winter holidays.

Both quality grade and yield grade are important to final grid values, but the table shows a wider disparity in value due to carcass marbling in comparison to yield grade. An array of outcomes exist across all regions but this data makes if fairly clear that quality remains the goal to pursue.

Your next read: Cash Cattle Trade To Record Highs: What’s Driving Prices?

Cattle Markets 2025: To Retain or Not to Retain

Mon, 06 Jan 2025 19:40:17 GMT

Average Oklahoma steer calf prices increased more than 61% from 2022 to 2024, leading to a sharp increase in average cow-calf returns (Figure 1). Cow-calf returns vary significantly across producers due to widely variable costs of production, but the message is clear — increasingly strong market signals for cow-calf producers to expand the beef cow herd. Positive cow-calf returns typically result, with a delay, in herd expansion. Figure 1 shows the strong cow herd inventory response to positive returns a decade ago.

(Peel)

New inventory data at the end of the month will confirm current herd status but it is likely that the herd continued to decrease in 2024 and prospects for herd growth in 2025 are limited.

(Peel)

Figure 2 shows a sharp contrast to higher cattle prices leading to the herd rebuild in 2014-2019 compared to the current situation. Heifer retention began in 2012, setting the stage for herd expansion that began in 2014. Increased heifer retention simultaneous with increasing cattle prices squeezed feeder supplies leading to the (then) record feeder prices in 2014 – 2015. Contrast that with the right side of Figure 2 where replacement heifer inventories have shown no significant increase thus far, despite rising feeder cattle prices. Heifer slaughter data through the end of the year, along with heifer on-feed inventories and feeder cattle sales receipts data all suggest little, if any heifer retention in 2024.

Not only did the beef cow herd likely get smaller in 2024, but the limited supplies of replacement heifers also suggests that the beef cow herd may get smaller yet in 2025 or, at best, stabilize at very low inventories. Historically, herd expansions require a year or two to gain momentum before herd inventories begin to increase. That process has not begun at this time.

If heifer retention begins in 2025, several outcomes are expected; tighter feeder supplies will push cattle prices and cow-calf returns higher; retained heifer calves will lead to increased replacement heifer inventories in 2026 and potential herd growth beginning in 2027. Depending on the pace of heifer retention, herd expansion could lead to cyclical production increases and price peaks in the second half of the decade.

If heifer retention does not begin in 2025, the cow herd will continue to dwindle, and cattle supplies will continue to slowly contract with higher cattle prices and a smaller industry until herd rebuilding begins. Either way, cattle prices are expected to remain elevated for at least two to four more years.

Your next read: Calculating Costs for Replacement Heifers

Cattle and Beef Markets: 2024 in Review

Mon, 30 Dec 2024 18:59:27 GMT

Looking back, 2024 was mostly a continuation of the story that has been developing since 2022. Tight supplies of cattle pushed cattle and beef prices higher to new record levels during the year. However, in some ways, 2024 was kind of a pause in the developing dynamics of the industry with more of a sideways move than noticeable progress to change the market situation.

Despite an expected 2024 calf crop down over 1% year over year and the sixth consecutive decrease in the total calf crop, feedlots were able to hold average monthly inventories fractionally higher compared to the year before. Total feedlot marketings in the past 12 months were down just 0.3% from the previous 12 months. Total feedlot placements were down 1.7% in the past year compared to the previous 12 months. Feedlots were able to hold inventories steady mostly due to continued heifer feeding in 2024. As of Oct. 1, heifers still represented 39.7% of feedlot inventories, near the upper end of historical levels and well above levels that would indicate heifer retention. Additionally, feedlots held inventory levels by extending days on feed and slowing down the turnover rate in feedlots. Kansas feedlot data shows that days on feed for steers increased by 3.2% in the first ten months of 2024, adding 6 days to average on-feed time over the same period a year earlier.

Although final data for the year are still coming, it appears that total beef production in 2024 was down just 0.6% year over year. This is significantly less than earlier expectations of a 4+ percent year-over-year decrease. In fact, fed beef production was up 2.2% due to larger than expected steer and heifer slaughter and a sharp increase in carcass weights in 2024. Steer slaughter was up 0.2% year over year, while heifer slaughter was down 1.1 compared to the previous year. Average steer carcass weights jumped 22 lbs. year over year with heifer carcasses averaging 18 lbs. heavier. Although fed beef production was higher year over year, Choice boxed beef prices averaged 2.8% higher year over year on strong prices for end meats from the chuck and round.

Without a doubt, the biggest change in 2024 was in nonfed beef production, down 13.2% year over year due to sharp reductions in cow slaughter. Beef cow slaughter was down 19.0% year over year and dairy cow slaughter was down 12.2% from the previous year. Reduced supplies of processing beef led to record wholesale trimmings prices, increased demand for imported beef, strong lean demand for end meats, and record cull cow prices.

All of the above suggests that cattle inventories continued to decline in 2024. USDA-NASS will confirm cattle inventories going into 2025 with the scheduled release of the annual Cattle report on Jan. 31. Much of 2024 was occupied with producers looking for indications of heifer retention that would lead to eventual herd rebuilding. With no indications of heifer retention at the end of 2024, the new year starts with the same question.

Derrell Peel, OSU Extension livestock marketing specialist, explains how livestock markets moved throughout 2024 on SunUpTV from Dec. 28, 2024 at

Cattle Prices Near Record Levels to Finish 2024

Tue, 24 Dec 2024 10:50:00 GMT

Feeder auction trading is finished for the year with new record prices in 2024. Combined Oklahoma auction prices for 500-pound steers (M/L, Number 1) averaged $320.14/cwt. with the highest weekly price of $360.99/cwt in early December. The average price this year was up 18.6 percent year over year and was up 62.6 percent over 2022 levels. The 2024 average price exceeded the previous record high in 2015 by 21.3 percent.

The average price of 800-pound steers (M/L, Number 1) this year was $247.43.cwt, up 14.7 percent year over year and up 50.5 percent over 2022 levels. The highest weekly price for these big feeder steers was $264.74/cwt. in early July and only slightly below that in December. The 2024 average price exceeded the previous annual record in 2015 by 21.6 percent.

Just a few more fed cattle are expected to trade to wrap up December. The 5-Market average fed price for 50 weeks through mid-December was $186.66/cwt., up six percent year over year and up 29.2 percent over 2022 fed prices. The 2024 average price is 21.3 percent higher than the previous high price in 2014. The highest weekly fed price was $197.09/cwt. in early July and is expected to end the year with prices close to that level.

(USDA/Peel)

Figure 1 shows how feeder and fed cattle prices have developed over the past 15 years. The current high prices are reminiscent of the cyclical peak prices of 2014 – 2015 with both having been provoked by drought exaggerated herd liquidations. However, some very important differences mean that the current situation will play out in a much different fashion going forward. The herd rebuild in 2014 – 2019 was sharp and rapid, leading to relatively brief high prices lasting about two years. This was possible because the pipeline of replacement heifers had been building prior to herd expansion. With two years of high prices already in 2023-2024, there is no indication that cyclically high prices will be as short lived as a decade ago. The pipeline of replacement heifers has continued to be depleted to this point. The cattle industry has shown no signs of attempting to rebuild the herd yet and the process will be slower when it does happen. The peak prices in 2014-2015 coincided with increased heifer retention that squeezed feeder supplies to the tightest levels. Since no heifer retention has occurred yet, the highest prices are ahead, possibly in 2025 but more likely beyond.

The inventory status of the cattle industry will be revealed in the annual Cattle report from USDA-NASS in late January. Many cattle producers will be receiving the annual inventory survey shortly. Producers are encouraged to complete the survey to provide good information for the industry. Reliable, accurate responses from producers is the only way for all producers, the industry and analysts to have timely and comprehensive information in order to plan and manage for the coming months and years.

Your next read: Congress Clears Continuing Resolution, Includes $31 Billion in Farmer, Disaster Aid and Farm Bill Extension

CAB Insider Market Report Shows More Action on Cattle Prices and Holiday Beef Demand

Fri, 06 Dec 2024 15:57:31 GMT

Last week’s cattle harvest was curtailed with the Thanksgiving holiday, yielding just 528,000 head on the heels of the prior week’s inflated total of 631,000 head.

Fed cattle values posted a sharp recovery last week to just under $190/cwt., a $3/cwt—improvement on the prior week. Prices have been rangebound since late September, trading between $184 and $190/cwt. for the period.

Calf and feeder cattle prices have been much more active in the past three weeks with two market-moving events. Widespread precipitation through the center of the country initially sent small grain grazers to the auction markets with gusto as winter wheat and similar winter grazing prospects turned optimism higher. Additionally, the discovery of screw worms in a southern Mexico cow prompted officials to close the U.S.-Mexico border for an undetermined period. The always-volatile Feeder Cattle futures contracts on the CME have responded sharply higher on the heels of both events. The nearby January contract has settled in a range around $258/cwt. in the past five days after a rapid ascent from the $243/cwt. opening price on Nov. 15.

Urner Barry 12/4/24

(Urner Barry)

Holiday middle meat demand remains a primary feature of the beef market as carcass quality ticks higher from what appears to be the annual low percentage mix of premium-grade carcasses. The USDA Prime share is up from it’s months-long position at 10% of total to 11% more recently. The share of brand-eligible carcasses certified for CAB adjusted quickly from their year-to-date low of 32% in early November to a most recent 36%.

Holiday Demand Lift
The boxed beef market is nearing the conclusion of the final price push for high demand middle meats. The window is quickly closing on wholesale orders that will ship in time for consumers to shop ahead of the Christmas holiday. Tracking the week to week price activity shows last week’s strong upward move in cutout values breathing a bit of prolonged life into the December market than has been true in recent years. Likely the late November date for the Thanksgiving holiday has pushed buying activity a few days forward this year.

True to expectations, both bone-in and boneless CAB ribeyes are capturing the largest upward price swings as we evaluate the CAB carcass on a cut by cut basis. CAB ribeye rolls were up $1.31/lb. last week, averaging $13.48/lb. This is second only to the all-time high of $14.49/lb. wholesale price reached in 2021.

Tenderloins are also up sharply with the brand’s latest wholesale average at $17.62/lb., a $1.12/lb. hike from the prior week and $5.42/lb. higher than the summer low. Strip loins have been a value focus for the brand in the past few years as a more affordable roasting item offering much of the same appeal for the holiday. At a wholesale average $8.20/lb. strip loins are priced a few cents under last year’s price at this time.

The big picture view for the CAB cutout shows a relatively flat pricing pattern ranging from $300 to $320/cwt. since mid-July. The summer cutout price peak was lower than in 2021 and 2023 but fall demand pulled the total CAB carcass value slightly higher than those years beginning in October.

Beef demand has been exceptional in a period of larger year over year carcass tonnage beginning in the second quarter of 2024. In the past five years carcass cutout prices have averaged 2 to 3% lower than their fourth quarter highs as the holiday demand push concludes through year’s end.

Holiday Roast Wholesale 12/4/24

(CAB)

CAB Insider Market Update for Nov. 20, 2024

Wed, 20 Nov 2024 20:34:49 GMT

Last week’s cattle harvest was truncated on Monday with Veteran’s Day pulling Monday’s fed cattle harvest down to 88,000 head while the remaining weekdays averaged near 100,000 head each.

Cutout values continue to show weakness as weekly average prices have retreated nearly $8/cwt. for traditional Certified Angus Beef ® (CAB) brand carcasses. The downward price direction follows a particularly strong October trend that saw the CAB cutout increase by $20/cwt. from the first of the month.

UrnerBarry Nov. 20, 2024

(UrnerBarry)

Softer boxed beef prices coupled with Live Cattle futures trading at a slight discount to recent spot cash cattle values pushed cattle prices $2.21/cwt. lower last week. A stronger futures price trend developed early this week, taking the December contract to a premium compared to cash.

On the other hand, feeder cattle demand caught fire on the heels of widespread precipitation throughout much of the winter wheat grazing region, including Oklahoma and the Texas panhandle. Some markets reported calf prices jumping as much as $20/cwt. as grazers’ outlooks were much higher for winter growing conditions.

A review of carcass subprimal pricing shows the lower price trend across much of the chuck and round primal, including ground beef values. Ribs continue to show price stimulus with typical fourth quarter demand, trading at similar wholesale prices as this time last year. Strip loins and short loins are slightly higher than a year ago, but adjusting a bit lower in the last two weeks following a strong run-up in preceding weeks. Tenderloins remain near $2/lb. cheaper than a year ago but demand should take spot market prices higher into early December before dropping off.

Beef Cow Slaughter 11-20-24

(CAB)

Cow herd rebuilding
Beef market watchers have discussed rebuilding the nation’s cow herd for months, anticipating a turnaround in cow numbers following healthy cow-calf margins and improving drought conditions. Gross cow-calf returns have exceeded expectations as the shrinking calf supply and strong beef demand collude to drive higher receipts. Even so, turnaround from the depth of the latest drought that brought beef cow harvest to a cyclical peak in 2022 has been slow to develop. The U.S. drought monitor has shown incremental improvement in November, but widespread shades of abnormally dry to extremely dry conditions remain over a large portion of the U.S.

Record-high calf values are strong stimulus for cattlemen to maintain or increase cow herd inventories. Yet the value of heifer calves has been so good that many cow-calf producers have opted to merchandise a large percentage of the heifer crop rather than increasing retention rates for breeding. Aside from the obvious cash-in-hand, those willing to increase breeding female numbers may have encountered high interest rates, increasing cow costs and lack of labor as potential limiting factors. Recollection of the feeder cattle market crash following record-high replacement female prices in 2015 generates a modicum of caution for others.

Year to date, U.S. beef cow harvest has declined 19% (12,700 head per week) compared to 2023. Culling of spring-calving herds typically boosts beef cow harvest volume to the annual high in late October through November. So far that seasonal spike has not developed as beef cow harvest has remained flat since early September. This suggests that more mature cows are being retained in 2024 while the total supply is 1.8 million head smaller than two years ago.

Beef x Dairy Influence
Beef volume from the dairy side of the supply chain is also expected to remain in a downtrend. Latest data shows a dramatic dip in dairy cow harvest with a steep drop from 51,000 head per week in early September to just 32,000 head in late October. Despite rising production costs dairy profitability was record-large in September. The dairy segment has suffered lower production volume due to avian influenza while the profitable beef x dairy cross calves have pulled replacement heifer numbers lower in recent years. Even so, total year-over-year milk production is quoted as larger in 2025 by Mike North at Ever.Ag, who also states that both domestic and export demand for dairy products is sharp. Recent profitability in the dairy segment suggests that dairy herd expansion will limit additional short-term growth in beef x dairy calf supplies.

Dairy Cow Slaughter 11-20-24

(CAB Insider)

Your Next Read: Could Trump Actually Be Good for U.S. Ag Trade?

CAB Insider Market Report Nov. 6

Wed, 06 Nov 2024 19:48:24 GMT

Last week’s federally inspected cattle harvest of 615,000 head was 8,000 head lower than the week prior and 21,000 head below the same week last year. Fed cattle harvest in the past three weeks has been relatively strong, averaging 496,000 head, just 1,000 head shy of the weekly total a year ago.

Carcass weights, on the other hand, continued their record breaking ascent with steer weights making a massive 10 lb. weekly increase to average their heaviest ever weight at 960 lb. apiece., 18 lb. heavier than the previous record set last December. Heifer carcasses, last posted at 866 lbs. each, are 14 lbs. heavier than their fall 2015 record-high.

UrnerBarry Nov. 6

(CAB)

For the week of Oct. 14, the carcass weight and head count equation places fed cattle carcass tonnage 1.7% larger than a year ago.

Live Cattle futures prices have suffered in the past week with the December 2024 contract down more than $4/cwt. from last Tuesday’s multi-week peak at $189/cwt. This pullback, however, concludes an arduous climb from the August/September fallout that took the December contract down to $173/cwt. The more recent correction creates a strong basis in the fed cattle market with last week’s cash price a $4/cwt. premium to the December futures. This incentivizes feeders to pull cattle ahead in the marketing schedule.

As fourth quarter holiday buying demand has kicked in, boxed beef cutout values have rapidly progressed in the past three weeks on seasonal strength. The comprehensive cutout price lost $16/cwt. in value since mid-August to the end of September at $300/cwt., but has now recovered all of that in last week’s summary average price.

Seasonality Takes Over
The fourth quarter tends to be the period most prone to follow historical seasonal patterns for carcass cutout prices. Although annual price levels have certainly advanced to record levels, the pattern in spot market values from October through December tends to track a pattern. The expectation of elevating prices beginning in early October was met with the Choice cutout rallying roughly $20/cwt. This is driven primarily on middle meat demand shifting from a much reduced year-over-year price point this summer, now elevating to match 2023 levels.

USDA Prime Cutout Nov. 6

(CAB)

On the supply side, carcass quality grades also tend to follow a strong seasonal pattern. The percentage changes in total USDA Prime and Choice carcasses tend to peak in March and bottom in September/October, varying on several factors including cattle age, type and enviromental factors. The range in Choice and Prime was wide in 2023 with an 85% March peak and 78% October bottom. This year the same 85% peak was realized in March, remaining much higher than 2023 through September before slipping fractionally to 82%. In the past five weeks a more pronounced downshift kicked in with a two percentage point drop to 80% Choice and Prime, with Choice giving up ground to Select.

Certified Angus Beef® brand certification rates follow seasonal grade trends with high sensitivity to Premium Choice and Prime marbling levels, essential to brand acceptance. As we’ve detailed in the Insider, heavy carcass weights, excessive ribeye size and external fat thickness tend to pressure brand acceptance rates in the fall when finished cattle weights peak. Since 2021 the range in brand acceptance has reached 40 to 42% for the March high and typically a 32% to 33% low by mid-October.

Percentage changes in the share of premium-grade carcasses can be hard to directly tie back to prices at the cow-calf level, given the more acute price mechanism of supply and demand for feeder cattle. Yet today’s Choice-Select spread, plus CAB premium, is generating roughly $95/cwt. for CAB carcasses on many grids. Buyers will, no doubt, adjust bids according to carcass outcome expectations.

USDA Prime Carcass Tonnage Nov. 6

(CAB)

USDA Prime grading remains resilient at the historic seasonal record of 10% of total fed cattle carcasses. Yet seasonal demand for Prime middle meats has driven the Prime cutout premium over Choice to $47/cwt., according to USDA. The latest report shows Prime grid premiums matching a year ago at $19.80/cwt. or $184 per head at the 930 lbs. blended fed cattle carcass weight average. Record carcass weights have boosted Prime carcass tonnage to a calculated 17% surplus over a year ago. Even though a relatively small portion of subprimal cuts are marketed to end-users at a Prime premium, the steady premium on higher supply provides direction toward the future. This will be a key for added sales volume for the Certified Angus Beef® brand Prime label, and higher gross values for calves and fed cattle.

CAB Insider: Ribeye Size Becomes a Factor

Fri, 25 Oct 2024 23:28:58 GMT

Federally inspected cattle harvest has been variable in the month of October. Specific to fed cattle, the month started strong with a 498,000 weekly total. The second week was a major pullback totaling just 468,000 head and recovering half of that large decline a week ago to average 489,000 head harvested.

Although packers chose to tighten product flow, fed cattle prices have plotted a higher trend, building from the mid-September $182-$184/cwt. range to last week’s average of $187/cwt. The October price trend has noted a price rally in the past three years. The price rally was followed by further November increases in 2021 and 2022 while last year’s October rally marked the top of the fed cattle market. The collapse in the November 2023 market was much less due to fundamentals and highly influenced by speculative futures activity.

CAB Insider

(UrnerBarry)

Current market enthusiasm on the production side of the beef supply chain has swelled from the eruption of sharply higher carcass cutout values. Using the Choice 600-900 lb. carcass as the benchmark, that cutout price has increased $22.69/cwt. from October 1 through Monday this week. The production decline two weeks ago spurred prices higher, while the October seasonal trend calls for cutout values to begin their fourth quarter rally by mid-month. The price uptick has been steep, and it arrived earlier than typical this October.

The Certified Angus Beef ® brand cutout has, unsurprisingly, followed a similar uptick with weekly reports indicating a $20/cwt. increase through Thursday last week, with more upside yet to be charted through the current period. The onset of middle-meat demand is especially intense in this period and widening price spreads for carcass quality are once again appearing. However, the CAB cutout remains narrower than a year ago as record carcass weights, combined with exceptional marbling achievement, have boosted the brand’s supply. Over-supply is not a threat as the seasonal dip in industry average grading tends to mark the annual low in November.

October and December 2024 Live Cattle futures prices have posted an extended upward run since mid-September as futures have caught up to the weekly spot market. In the past week, those contracts have corrected slightly lower but are seeking to maintain a level par with cash cattle.

Ribeye Size Becomes a Factor
In the CAB Insider, we recently focused on the top five reasons eligible carcasses fail to meet all 10 of the brand’s carcass specifications. From our 2023 data set, carcasses with marbling scores below Modest 00 or “Premium Choice” captured 83% of carcasses that missed the mark. However, as carcass weights continue to balloon this fall, attention turns to the second-most commonly missed specification: the brand’s 10 to 16-inch allowable ribeye area requirement.

Intuition suggests that since hot carcass weight is also a brand specification, with a 1,100 lb. maximum, record-heavy carcasses could have the highest potential to miss brand acceptance.

While carcass weight and ribeye size aren’t directly correlated, heavier carcass weights are associated with larger average ribeye area. Research done more than a decade ago shows that ribeye growth tends to continue, but at a decreasing rate, as live weight passes 1,400 lbs. or so, in steers. Inclusion of a beta-agonist in many modern steer diets is also a likely factor in increasing lean muscle growth at the end of the period, increasing ribeye area measurements upon harvest. But lean growth in the final days of the feeding period allowing heavier out-weights to be achieved is an economic benefit.

Without belaboring the topic, it’s appropriate to point out that feedyard management will follow where the highest returns exist. Currently adding more pounds to cattle already on inventory is the best proposition in the market.

Steer Carcass Weight

(CAB Insider)

We anticipate the traditional annual heaviest carcass weights by mid-November. Throughout this period Certified Angus Beef ® brand carcass acceptance rate typically charts a lower seasonal trend due to declining quality grade. This November will feature a larger-than-normal slippage of brand-eligible carcasses due to ribeye size. This occurs as average steer carcass weights continually increase, and they were averaging 950 lbs. two weeks ago.

Feeders will continue to reap rewards in the cost and return equation in a market that has recently moved to higher prices. Grid-sold cattle are, on average, capturing Choice and Prime quality premiums at a higher percentage rate this fall. Yet, yield grade and heavy-weight discounts threaten to devalue premiums for the heavy pens of steers, in addition to fewer CAB qualifiers.

Beef Production and Fall Beef Demand

Mon, 21 Oct 2024 20:29:41 GMT

As of Oct. 18, the daily Choice boxed beef price was $320.65/cwt., up from a recent low of $296.37/cwt on September 26 and the highest price since July 15. The weekly Choice boxed beef price is also at the highest level since July and has averaged 2.2 percent higher year over year and a record high for the year-to-date (Figure 1). Numerous wholesale cuts have moved higher recently including chuck arm roast (IMPS 114E), chuck roll (116A), chuck mock tender (116B), and chuck flap (116G). Wholesale round cuts have also moved higher including round knuckle (167A), top inside round (169A), bottom (gooseneck) round (170), outside round (171B), and eye of round (171C). Middle meat prices from the loin and rib have also increased including bottom sirloin flap (185A), sirloin tri-tip (185D), loin strip (180), and tenderloin (189A). Likewise, wholesale ribeye prices (112A) have increased recently and are showing an early seasonal demand for the holidays.

Figure 1. Boxed Beef Cutout Value

(Peel)

Thus far in 2024, steer slaughter is unchanged from one year ago. Heifer slaughter is down 1.6 percent year over year. Total fed slaughter is down 0.7 percent compared to last year, less than earlier expected. For the year-to-date, steer carcasses have averaged 25.5 pounds heavier than last year, and heifer carcasses are averaging 22.6 pounds heavier than one year ago. The result of stronger than expected fed slaughter and heavier carcass weights has been an increase in fed beef production of 1.9 percent year over year thus far in 2024. In fact, for the last 16 weeks, fed beef production has been 3.7 percent larger year over year. The increase in boxed beef prices is perhaps even more surprising in the face of increased fed beef production. Higher prices and increased quantities suggest that beef demand continues to be very robust.

In contrast to fed beef production, nonfed beef production is sharply lower this year, down 12.8 percent year over year. Total cow slaughter is down 15.3 percent, consisting of a 13.8 percent year over year decrease in dairy cow slaughter and a 16.8 percent decrease in beef cow slaughter so far this year. Bull slaughter is also down 8.1 percent compared to last year. Tighter supplies of lean trimmings have kept processing beef prices higher this year and the demand for lean has increased demand for lean carcass cuts. For example, the current wholesale price of 90 percent lean trimmings is higher than wholesale prices for top inside round, bottom (gooseneck) round, and outside round.

In the fall, summer grilling demand gives way to seasonally stronger demand for roasts, crock pot cooking and increased middle meat demand in restaurants. Wholesale ground beef prices have moderated recently as hamburger grilling demand slows but prices remain well above year ago levels. Total beef production is down a scant 0.7 percent so far this year and may end the year equal to year ago levels. Despite this, wholesale and retail beef prices are higher thus far in 2024.

Speer: Better To Have and Not Need Risk Management Strategy Than Need It and Not Have It

Wed, 16 Oct 2024 23:01:42 GMT

Self-Deceit: Several weeks ago my column featured some recent comments by Howard Marks, Oaktree Capital ( Mr. Market Miscalculates ). He notes that one of the key sources of miscalculation is our inherent tendency towards wishful thinking (i.e. what the market will be). His commentary includes a quote from Demosthenes and one of Charlie Munger ’s favorite phrases to repeat as it relates to investing: “Nothing is easier than self-deceit. For what each man wishes, that he also believes to be true.”

The column also highlighted some discussion about a backgrounder who, based on an email I received, was selling his calves, “because the futures made no sense to [him].” But Mr. Backgrounder was NOT a risk manager – he was a wishful thinker.

He was hoping the market would perpetually work higher, and thus believed it to be true. Alas, when that didn’t occur, it must be someone’s fault. The email I received claimed the culprit must be speculators and subsequent dysfunction at the CME.

But Mr. Backgrounder is, in fact, a speculator himself. I explained that “he’s long the physical market in hopes of profiting from market fluctuations (the very definition of a speculator). He’s betting on the come and a willing participant in bearing that risk.”

Risk Management: The point being, it’s impossible to accurately forecast everything that’s going to happen (no matter how much you may think you know). Markets ebb and flow. And sometimes they’re just downright awful. Financial historian Peter Bernstein reminds us that, ”…history tells us over and over again that the unexpected and the unthinkable are the norm, not an anomaly.”

With that in mind, I noted in Drovers State of the Beef Industry (SOBI) there’s been lots of media coverage on Livestock Risk Protection (LRP) over the past several years. Accordingly, awareness is building among producers. For example, 77% of SOBI respondents indicated they were familiar with LRP – and one-fourth use the program and almost half are considering doing so.

However, the remaining quarter of respondents indicate they “have no intention participating in the next year.” It’s also interesting to note those responses line up with herd size. That is, the average herd size of those using the program was 345 head. The other two categories (considering and no intention, respectively) represent operations with 307 and 229 head, respectively.

IF you’re part of that cut that’s considering LRP, it’s not too early to begin thinking about next year’s calf crop. LRP is an especially easy (not to mention subsidized) means by which to introduce risk management to your operation if you’re not familiar with futures and/or options.

Value At Risk: What’s the upshot to all of this discussion? Namely, things that never happen, happen all the time. Producers should constantly be prepared for the unexpected and unthinkable – that’s especially true given there’s more value at risk than ever in the business.

One of my favorite quotes about risk comes from Lauren Child – author of the Clarice Bean children’s books (perhaps my daughter’s favorite character when she was small). A line from one of her books has stuck with me after many years: “Always remember: it’s the worry you haven’t thought to worry about that should worry you the most.”

That’s why risk management is essential: better to have it and not need it, than need it and not have it.

Nevil Speer is an independent consultant based in Bowling Green, KY. The views and opinions expressed herein do not reflect, nor are associated with in any manner, any client or business relationship. He can be reached at nevil.speer@turkeytrack.biz .

Nalivka: It All Traces Back to Beef Demand

Fri, 11 Oct 2024 19:57:54 GMT

The market took a normal seasonal downturn into September following the Labor Day weekend pushing the question of demand and the opportunity for seasonal strength in the fourth quarter to the forefront. It’s been said, the beef industry is getting to the point of “pushing the envelope” regarding retail demand. That remains to be seen.

One issue that is beginning to dominate the conversation is that live weights are hovering near 1,600 lb. for some cattle and days on feed are pressing against the 200-day figure. It might not make sense until we consider quality grade and the cost for each additional pound relative to the market, even in the face of declining feeding efficiency as those cattle get heavier. At any rate, the grids are paying the bill – but for how long. Well, that goes back to beef demand.

A second issue is feedlot break-evens. In the latter half of August and September, feeding margins improved with lower feeder cattle prices. By then, feeder cattle prices were down 7% from July through early August, which reduced break-evens from the mid-$180s to the low $170s per cwt. Those September cattle expected to be finished in March present an opportunity to bring margins back over $200 per head.

Last, but not least, the Federal Reserve lowered interest rates by 50 basis points with further cuts expected. That’s positive on the cost side as well.