CAB Market Update
The fed cattle trade has undergone a tumultuous ride in the past two months.
Weekly fed steer prices averaged $237 per hundredweight (cwt) during the second week in October, then rapidly declined $28 per cwt by the third week in November.
The first week of December’s trade featured a sizeable recovery with the five-area steer average up $10 per cwt, landing at $221 per cwt with prices as high as $226 per cwt in Kansas.
Cash trade was limited to fewer than three packers in Texas, triggering confidentiality rules by U.S. Department of Agriculture (USDA) regulations. This rule is typically only triggered in the Colorado region where it’s the norm for trade to be reported for just two packers.
Price recovery wipes out packer margins
The total harvested head count was dramatically higher the first week of December, as the 600,000 head eclipsed the prior week’s holiday schedule by 102,000 head.
Before the first week of December’s strong upward move in the spot cash cattle price, packer margins were calculated somewhere north of $50 per head. This helped to incentivize packers to ramp up harvest levels, coupled with the increased volume needed to fulfill pre-holiday grocery store beef obligations.
The cattle price recovery quickly wiped out much of the packer margin, setting it closer to breakeven as this week got underway.
Carcass cutout values began December with a cheapening trend in continuation of the downward pattern established at the beginning of November.
Many observers are decrying weakening beef demand due to the lower price trend. However, softer cutout values were recorded for the month of November in four out of the last five years, with the exception of 2024.
December price trends are mixed in the last five years with 2022 and 2024 charting higher prices, and the remaining three years trending lower.
Cutout price spreads are mixed with the Certified Angus Beef (CAB) premium above Choice at a very reasonable $16.81 per cwt, down three dollars per cwt during the first week of December.
The Choice-Select spread remains relatively wide at $20.06 per cwt in Urner Barry’s data. This level is much lower than a year ago, as the Select grade share of fed cattle has slipped to just 10.9 percent of the carcass supply.
Customers for Select-grade product are finding their orders shorted, while distributors have told them to get on board with “at least” USDA Choice moving forward.
Big shifts in quality grades
The 2025 quality grade trend tracked the USDA Prime grade a full percentage point higher than the prior year through August, averaging 11.5 percent. Since then, the Prime grade trend has defied seasonal expectations, normally setting a course toward a fall low in both Choice and Prime grade percentages.
Instead, the Prime share steadily increased in a punctuated departure to the upside, averaging 12.1 percent since August.
While the unseasonal swing to the upside is impressive, the past four weeks of data add more emphasis to the chart.
In November, Nebraska packers harvested three weeks of cattle above 14 percent Prime with the final week spiking to 17.2 percent. This stands to reason as the northern feeding region is currently carrying the most market-ready supply of cattle with the heaviest carcass weights, indicating days on feed are pushing grade upward.
Record-heavy industry carcass weights are a nationwide trend, but led by northern cattle.
On the other hand, Texas feedyards currently have the least occupancy with their cattle inventory hindered by the absence of Mexican cattle. Even so, the Texas grade trend is also charting much richer this season.
While the state’s Prime grade is exceptional compared to history, averaging 7.8 percent since June, the uptrend in USDA Choice is notable.
The Texas Choice grade average moved little on either side of 64 percent through October this year.
Yet, the last four weeks saw Choice carcasses jump to average almost 69 percent of the total, while the Prime share gave no ground, averaging 8.1 percent in the past month.
A combination of factors in Texas creates ample cause for the richer grade trend.
First, the average Mexican feeder cattle supply has lower genetic potential for marbling. Absence of these cattle in the current Texas carcass mix easily pushes quality grade higher in the state.
Also, the increase in beef on dairy cattle over the past several years has brought the grade higher with refined terminal genetics introduced through this substantial Texas cattle supply.
Finally, it’s understood some northern cattle are shipping to Texas to be harvested as the northern feedlot sector is heavy on market-ready head counts.
A larger share of upper two-thirds Choice and Prime carcasses in the Angus-type cattle supply is also helping to hold the CAB carcass certification rate a percentage point higher than a year ago, averaging 36 percent for the past six weeks.
Record-heavy carcass weights featuring average steer carcasses at 988 pounds are keeping a lid on brand acceptance rates.
While richer average marbling across the weekly fed harvest suggests the industry should see even higher brand acceptance rates, there has been an increase in carcasses disqualified because they exceed the brand’s maximum 1,100-pound carcass weight.
Paul Dykstra is the director of supply management and analysis at CAB. He can be reached at pdykstra@certifiedangusbeef.com.
