CAB Market Update

The fed cattle market has been steadily stronger since the first of the year, gaining $10 per hundredweight (cwt) from the opening week’s $231 cwt value through the first week of February’s $241 per cwt average. 

This closely matches the early 2025 trend but has extended the pattern a week longer than that of a year ago with the first week of February’s continuation higher.

Cattle harvest drastically smaller

The drastically smaller year-on-year cattle harvest is a significant factor differentiating 2025 and 2026. 

Since the beginning of the year, fed cattle harvest head counts have run roughly 10 percent smaller than a year ago. Tightened cattle supply and packer losses deeply in the red both continue to ration the harvest pace. 

Logic suggests no changes to throughput as long as both cattle and cutout prices work antagonistically against packer profitability.

A counterbalance to lighter harvest runs continues to rear its head in the form of heavy carcass weights. 

Latest data for the week of Jan. 19 featured a three-pound uptick in steer weights to average 987 pounds each, just two pounds below the record marked in December. 

January weights will average near 30 pounds heavier than a year ago.

Weekly average cutout prices turned modestly lower in early February after the comprehensive cutout value increased 3.6 percent since the beginning of January. 

As demand turned to the ends of the carcass, significant discounting on middle meats was a theme in January. 

History suggests the most preferred steak items have already posted seasonal low prices, with unseasonably warm weather in some regions coupled with expected early spring buying stimulating prices.

Utilization key to prime success

Fed steer and heifer carcass quality is charting new territory in the first five weeks of the quarter. 

Record-heavy carcass weights, the longest feeding periods on record and generations of improved genetics continue to press carcass quality grades to new heights. 

This has generated an average 14.2 percent Prime carcasses in the fed cattle mix, while Select carcasses average an unprecedented low at 9.7 percent of the total since Jan. 1. This stands in stark contrast to the 10.7 percent Prime and 13.6 percent Select grade mix recorded for the same period a year ago. 

As the carcass mix continues to press higher with richer quality grades, the expected impact to cutout prices has also come to fruition. 

The Prime cutout premium to Choice narrowed to $19 per cwt in January versus $59 per cwt a year ago and $37 per cwt in January 2024. 

This contrast indicates a wide range and directional change in the premium across three years. 

However, the number of Prime carcasses in the past five weeks has been 21 percent greater than a year ago, while carcass weights have also been 30 pounds heavier for the period. 

Recent Prime demand models show 20 percent and greater year-over-year consumer demand increases for multiple months for the recent two years. 

Growing Prime supply has been met with growing demand, generally across the last decade. The recent added upswing in the Prime carcass supply suggests expanded utilization of Prime-specific sales across the entire carcass is warranted. 

In the past couple of years, packers have added a growing list of cuts to their sales sheets specific to their Prime-graded product. This is evident in Certified Angus Beef (CAB) brand sales as seen in the most recent year’s sales growth in the CAB Prime category. 

Further opportunity exists to capture consumer demand across the Prime carcass, as evidenced by the most recent U.S. Department of Agriculture (USDA) carcass cutout value report. 

For the first week in February, USDA lists the Prime cutout premium to Choice at $16.94 per cwt for the entire carcass. 

Yet, practically all of the premium is found in the rib primal which features a $73.17 per cwt premium and loin at $39.36 per cwt. 

Briskets have often carried a larger premium than at present, but very adequate supplies have narrowed that premium to $3.13 per cwt. 

While Prime premiums are increasingly being captured on some cuts on both ends of the carcass, chuck and round summary values show relatively small premium contributions, as do the flank and plate. 

It’s important to note more demand for individual Prime grade cuts is being discovered on the part of packers and wholesalers as they educate downstream users about the opportunities to capitalize on growing Prime demand. 

Emphasis on greater utilization of Prime and CAB Prime carcasses is key to recapturing larger Prime cutout premiums which get allocated throughout the supply chain. 

After all, the economic drivers fueling current carcass weights and extended feedlot stays may shift over time, such that carcass quality takes a step back. Even if not, building demand through exceptional quality is the factor that has allowed beef to vastly outpace other protein options in the market.

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