CAB Market Update

The pace of cattle harvest slowed even more during the week of July 21, with 549,000 head total – down 14,000 head from the week prior. A mechanical issue at one major plant pulled the head count lower on July 21, yet abundant harvest capacity did not pick up the slack by July 25, which has been the truncated harvest day in most recent weeks. 

After an early July pullback to the $224 per hundredweight (cwt) average, fed cattle prices uncharacteristically ratcheted higher for three weeks, culminating in a $238.80 per cwt steer average for the week of July 21. 

Live cattle favor seasonal expectations

At the beginning of July, the nearby August live cattle contract started at $212 per cwt, apparently favoring seasonal expectations leading to a major cash market break developing through the month. Since quite the opposite has occurred in the cash market, the August contract has had to hustle to catch up to the reality of the fundamentals. 

Thus, the August contract, as of July 29, traded at $229 per cwt, still below the market average but in-line with the southern cash trading range of $230 per cwt last week. 

Packer leverage has been impossible to find as spot negotiated trade remains unfazed in the wake of handfuls of cutout price cuts throughout the past three weeks. The National Comprehensive Cutout has dropped 19 cents per pound, or five percent, since the beginning of July, while spot fed cattle values increased 6.6 percent. 

Cutout values are expected to continue on a slightly lower trend for a few weeks as the market finalizes a reset coming off of the sharp summer highs. 

Ground beef demand has been a bit softer lately as buyers watch round primal prices weaken. Rib values were stronger during the week of July 21 but short loin, strip loin and sirloins continued sharply lower retreats from record early July price points. 

Trends entrenched

The July 25 U.S. Department of Agriculture’s Cattle Inventory and Cattle on Feed reports made for a big day in updating cattle supply forecasts for the near future. 

June 2025 feedlot placements were eight percent lower than June 2024, greatly missing the average analyst expectations which predicted just a 2.5 percent reduction. 

The production sector is more attuned to the impact of the stoppage of Mexican feeder cattle imports and a domestic feeder and calf supply down 0.4 percent, according to a CattleFax estimate, from the July 25 report. 

Downstream beef buyers – distributors and grocers – must adjust their price expectations to remain on trend at recent levels with an upward bias. 

Since early July, the national Comprehensive Cutout price has declined five percent from $388.64 per cwt to $369.20 per cwt – 17 percent above a year ago. This classic July downturn shouldn’t be mistaken for weakening demand or a shift to a lower trading range for beef. 

Instead, this normal seasonal dip should be followed by an increase ahead of Labor Day, followed not long after by fourth quarter holiday demand surge. 

These are historic patterns, subject to unforseen developments impacting the market. 

Certified Angus Beef (CAB) brand supply trends will continue to see the push and pull of cattle management responding to tight cattle supplies. 

Estimates for this year’s corn crop suggest an exceptionally large yield, continuing downward price pressure. This, coupled with freshly printed record replacement feeder cattle prices, will work to entrench the modern feedyard motivation to push days on feed to new heights with carcass weights following along to new records. 

The latest average fed cattle carcass weights are 23 pounds heavier than a year ago and 46 pounds heavier than two years ago. Feedyard and packer margins are assisted through the increased weight per head. 

In this scenario, excessive external carcass fat is problematic on many pens of cattle, but economics have lately been overriding this downfall. 

With even tighter cattle supplies ahead in 2026, consumer beef demand remains key to pulling the beef supply chain through the narrowest of the cycle supply lows. So far, higher prices have not diminished traditional CAB cutout premiums. 

The magnitude of inquiries for the most premium, CAB brand Prime product from retail end users has been impressive lately, at even more impressive price levels. Yet, with expected further tightening of fed cattle harvest throughput into next year, the proportion of quality carcasses meeting brand standards is keenly important. 

The industry cannot grow the pie without the ingredients, and the customer needs every carcass the supply chain can create. 

A parting supply chain bright spot from the Cattle Inventory Report shows a slight increase in the beef cow herd this year – CattleFax estimates an increase of 0.9 percent – and a relatively even, yet slightly smaller beef replacement heifer number compared to a year ago.

With cow/calf economics looking bright near term, the capital investment in replacements – i.e. opportunity cost in retention – is ever-growing. 

Ranchers have to compete with feeder cattle prices whether buying replacements or opting to retain them. This means decisions on expansion are very much individualized from producer to producer and likely won’t result in an “all-in” turnaround in heifer retention.

Paul Dykstra is the director of supply management and analysis at CAB. He can be reached at pdykstra@certifiedangusbeef.com.