FED cattle start 2026 in record-breaking fashion. They set new all-time highs for quality grading and carcass weights.They graded 13.81% Prime and 73.40% Choice for a combined record of 87.21% the week ended January 3. This beat the previous record of 85.35% set the week ended May 10, 2025. The week ended January10 saw a near record of 87.03%. The January 3 week also reported record high carcass weights. Overall weights averaged 905 lbs, breaking the previous record of 896 lbs set the week ended November 22 last year. Steer weights averaged 989 lbs, breaking the previous record of 988 lbs. Heifer weights averaged 900 lbs, breaking the old record of 897 lbs. Both previous weights were also set in the week ended November 22, 2025.
Both records are a function of cattle feeders holding on to cattle as long as possible and relatively mild weather in Cattle Feeding Country for this time of year. Cattle feeders still have a financial incentive to feed cattle to the heaviest possible weights, as packers are not discounting heavy cattle as in past years when there were ample supplies. In addition, market-ready supplies of cattle are increasing at the same time as harvest levels are declining. Federally-inspected slaughter the week before last was 560,869 head, versus 601,259 head the same week last year. This was reflected in a beef production total of 503.4M lbs, versus 524.6M lbs the same week last year.
Packer Margins Remain Deeply Red
Last week’s total was expected to be only 540,000 head. Reduced harvesting rates remain the norm as packers attempt to relieve the pressure on their operating margins, which remain deeply in the red, says Bob Wilson, HedgersEdge.com. Margins the week before last were negative by $201.86 per head, according to HedgersEdge.com. They were negative by $240.22 per head the week before that and negative by $260.85 per head the week ended January 3. The previous positive margin was $61.35 per head the week ended December 5 last year. Only nine weeks in 2025 saw positive beef margins.
Boxed beef cutout values have responded to the reduced beef production although not as much as packers had hoped. However, they did advance strongly the week before last. The comprehensive cutout averaged $360.93 per cwt, versus $353.73 per cwt the prior week. The Choice cutout averaged $355.04 per cwt, versus $350.48 per cwt, while the Select cutout averaged $352.78 per cwt, versus $346.94 per cwt. Formula-priced sales accounted for 55.2% of the total volume of 6706 loads, spot market sales accounted for 28.9%, forward sales accounted for 15.9% and export sales accounted for 12.2%. Export’s 819 loads compared to 2025’s weekly average of 764 loads. One feature of the cutout values is the narrow spread between the Choice and Select cutouts. The spread the week before last was an average $0.80 per cwt, with a negative spread of $0.94 per cwt on January 12. The Choice cutout the first four days last week increased by $5.07 per cwt to $367.45 per cwt, while the Select cutout increased by $1.54 per cwt to $361.73 per cwt. The spread was $5.72 per cwt.
Cash live cattle prices the week before last averaged $232.50 per cwt live, up $0.64 per cwt from the prior week. Dressed prices averaged $364.64 per cwt, down $0.35 per cwt from the prior week. Most sales occurred late on the Friday. Little cash trade occurred the first three days of last week. The only trade of note was on Tuesday when 635 head sold in Iowa-Minnesota at $232 per cwt live. Thursday morning saw a light trade in Iowa where cattle sold at $232 per cwt live.
USDA UPWARDLY REVISES 2025 BEEF TOTAL
USDA upwardly revises its forecasts for 2025 and 2026 beef production. Based on preliminary slaughter data for last December, the forecast for fourth quarter 2025 beef production is raised 50M lbs from last month, says USDA’s Economic Research Service (ERS) in its latest Livestock, Dairy and Poultry Outlook report. The change reflects a marginal increase in fed cattle and cow slaughter that more than offsets a decline in bull slaughter from last month’s forecast. In addition, anticipated carcass weights for December were adjusted slightly lower. As a result, total commercial beef production in 2025 is estimated to have been 26.000 billion pounds, a 4% decline from 2024 and an 8% decline from the record set in 2022, says ERS.
According to the latest Cattle on Feed report, the December 1 feedlot inventory was estimated at 11.727M head, about 2% below the 11.982M head estimated for December 1, 2024, says ERS. Feedlot net placements in November were down over 11% from last year at 1.542M head. Marketings in November totaled 1.521M head, down nearly 12% from a year ago. In the three largest cattle feeding states, as of December 1, the number of cattle on feed in Texas was down 9%, while Kansas and Nebraska were 1% and 3% higher than last year, respectively. However, market-ready supplies in all three states were at elevated levels compared to last year. This coincides with the significant slowdown in steer and heifer slaughter and in net placements backfilling empty feedlots in 2025, says ERS.
Based on the cattle feedlot placement data for November, expected placements during the fourth quarter were reduced, says ERS. This might suggest reduced marketings anticipated in the second quarter of 2026. But there were 25% more cattle on feed over 150 days on December 1 than a year ago. For this reason, the impact on marketings in 2026 is expected to be more pronounced in the third quarter. This results in unchanged marketings in the first half of 2026 and a net decrease in the second half of the year relative to its previous month’s outlook, says ERS.
Carcass Weight Expectations Are Raised
Further, based on December slaughter data, ERS’s expectations for average carcass weights in 2026 are raised across all quarterly forecasts, it says. As a result, its 2026 beef production forecast is raised 10M lbs from last month to 25.735 billion lbs, a 1% decline from 2025. Fewer anticipated marketings in the third quarter are more than offset by heavier expected carcass weights. Looking further into 2026, USDA will release its annual Cattle Inventory report on January 30, which will provide insights into calves available for placement in feedlots in the first half of 2026, says ERS.
Starting off 2026, weekly prices for slaughter steers and feeder steers have recovered more than 60% of the decline from their respective highs last year to the lows that occurred in November, says ERS. Specifically, live slaughter steers sold on a negotiated basis in the 5-area marketing region topped $244.25 per cwt the week ending August 24, 2025, and then declined nearly $33 per cwt to $211.53 per cwt the week ending November 30, 2025. Since then, prices have recovered 62% of the value lost as of the week ending January 11, 2026. Based on the rebound in slaughter cattle prices in early 2026, ERS has raised its first quarter price forecast by $2 per cwt to $232.00 per cwt. Its third quarter price was raised $1 per cwt on fewer expected marketings available for slaughter. It raised its 2026 annual price forecast to $235.75 per cwt, an expected 5% increase from 2025, says ERS.
As for feeder steers weighing 750–800 lbs at the Oklahoma City National Stockyards, last year they set a top the week of October 13 at $383.48 per cwt, says ERS. They then declined $66 per cwt over the course of six weeks to $317.71 per cwt. Based on January 5, 2026, sales data, feeder steer prices were recorded at $362.34 per cwt, nearly $93 per cwt above the same week last year and a 68% recovery from the decline in late 2025. This price strength was carried over into 2026 quarterly forecasts, which were raised $12 per cwt from last month for an annual price forecast of $357.00 per cwt, 11% higher than 2025, it says. ERS in its report also outlined changes in global beef trade policy.
ERS Outlines Notable Trade Moves
There have been several notable developments in the global beef market over the past month, says ERS. First, as of January 1, 2026, the United States tariff-rate-quota for countries without a specific quota or free trade agreement (“Other”) declined to 52,005 metric tons (mt)while a new quota has been established for the United Kingdom at 13,000 mt. The biggest impact this will have on U.S. beef imports is that the “Other” quota may be filled even faster this year, says ERS. In 2025, both the Australia and “Other” quotas were filled by the end of the year, with several other quotas nearly filled. According to the U.S. Customs and Border Protection Commodity Status Report, the 2025 “Other” quota was filled within the first 17 days of 2025. As of January 5, this year, the 2026 “Other” quota was already 91% filled. Once the quota is filled, imports from countries that do not have access to other quotas or trade agreements are subject to a higher out-of-quota tariff of 26.4%.
Second, China announced the results from its beef safeguard investigation and established quota allotments for most large beef exporting countries and a 55% over-quota tariff rate, says ERS. This may limit beef exports to China from countries like Brazil, Australia and Argentina. While the United States would also be subject to a quota, the export registrations for most U.S. beef facilities expired in 2025 and have still not been renewed, meaning that minimal U.S. beef is currently being exported to China. Instead, the indirect impact of China’s safeguard announcement is that extra product from Brazil, Australia, Argentina and other global suppliers that are limited by the new quota is expected to shift to other markets such as South Korea and Japan, increasing competition for U.S. beef in those markets and putting downward pressure on U.S. exports. At the same time, these suppliers may have more product to ship to the United States, supporting U.S. beef imports, says ERS.
Finally, Mexico announced a new 70,000 mt quota for beef imports from countries without a free trade agreement, says ERS. Previously, Mexico had an anti-inflation decree that allowed certain food products, including beef, to enter duty-free even if Mexico did not have a free-trade agreement with that country. Brazil’s beef shipments to Mexico have been climbing since the end of 2023, with substantial quantities shipped in mid-2025. Mexico’s new quota may limit Brazil’s shipments to the country, which could support U.S. beef exports to Mexico. Additionally, with Brazil having limited access in both Mexico and China, more of their exports may be shifted to the United States, says ERS.
ERS Lowers Export Estimate
Based on recent data, ERS’s estimate for fourth quarter beef exports is lowered 10M lbs to 590M lbs, while its annual estimate is 2.568 billion lbs. The 2026 forecast is also lowered based on increased export competition resulting from the policies discussed above, it says. The first and second quarter forecasts are each down 10M lbs and the third and fourth quarter forecasts are lowered 20M lbs each for an annual forecast of 2.425 billion lbs.
On the import side, October imports were slightly lower year-over-year for the third month in a row, says ERS. Imports from Brazil were 62% lower year-over-year while imports from New Zealand were down 30%. These decreases were only partly offset by larger imports from Mexico, Canada, Australia, Nicaragua, and Argentina. Imports from Mexico in October were the second largest on record behind May 2020. U.S. imports from Mexico have been increasing throughout the latter half of 2025. This has been supported by a combination of increased cattle supplies, resulting from the U.S. ban on cattle imports from Mexico, and higher imports from Brazil to satisfy domestic consumers. This has resulted in more domestic production available for export to the U.S., says ERS.
ERS raised its fourth quarter 2025 import estimate by25M lbs to 1.175 billion lbs. Its annual 2025 forecast is 5.369 billion lbs. Its 2026 forecast is also raised due to recent global trade policy changes discussed above. The first quarter is raised 25M lbs to 1.550 billion lbs. The second quarter is unchanged at 1.475 billion lbs. The third and fourth quarter forecasts are raised by 25M lbs each to 1.300 billion and 1.200 billion lbs, respectively. Its annual forecast is 5.525 billion lbs, which if realized would be a 2.9% year-over-year increase, says ERS.
TYSON LAYS OFF NEARLY 5000 PEOPLE
TYSON Foods lays off nearly 5000 employees at two of its six U.S. beef processing plant. It lays off 3200 workers at its Lexington, Neb., plant which is now closed. It lays off 1761 workers at its Amarillo, Texas beef plant, which it has downsized to a single, full-capacity shift. The plant previously had a workforce of 3800 to 4000 people. The actions removed 7700 head of maximum daily slaughter capacity, as the Lexington plant had a capacity of 4800 head per day and the Amarillo plant had a capacity of 5800 head per day.
The University of Nebraska-Lincoln (UNL) provided an economic analysis of the Lexington plant and estimated the annual statewide economic impact of the closure would be $3.28 billion. Tyson last November said that to meet customer demand, production will be increased at other company beef facilities, optimizing volumes across its network. Tyson Foods recognizes the impact these decisions have on team members and the communities where it operates, it said.
SMITHFIELD BUYS NATHAN’S FAMOUS
THE nation’s largest pork processor, Smithfield Foods, is acquiring Nathan’s Famous, Inc., owner of the Nathan’s Famous hot dog brand, for approximately $450M. Under the terms of the definitive merger agreement, Smithfield will acquire all of Nathan’s Famous issued and outstanding shares of its common stock for $102.00 per share in an all-cash transaction. Smithfield since 2014 has licensed the brand name to manufacture and market Nathan’s Famous products to the retail and foodservice channels. The acquisition secures the company’s rights to the brand, says Smithfield.
The Nathan’s Famous acquisition is a meaningful step in the progression of Smithfield Foods allowing it to own all of the top brands in its packaged meats portfolio and unlock new growth opportunities for its largest segment, says Smithfield president and CEO Shane Smith. Since entering into its licensing agreement in 2014, Smithfield has made significant investments to build and grow the Nathan’s Famous brand. With its manufacturing scale, marketing strength, product innovation capabilities, and retail and foodservice channel expertise, acquiring the brand will allow it to take the brand to new heights, he says.
EIGHT NEW SCREWWORM CASES EMERGE
MEXICO’S National Service of Agro-Alimentary Public Health, Safety and Quality (SENASICA) confirms eight new cases of New World screwworm (NWS) in the state of Tamaulipas, which borders Texas. Since December 30, 2025, 11 cases have been confirmed in Tamaulipas, says the Texas Department of Agriculture (TDA). It’s just plain cowboy logic, when you’re seeing this many cases this fast, it tells you there may be established screwworm fly populations in Tamaulipas, says Texas Agriculture Commissioner Sid Miller. TDA is grateful that sterile fly deployment has begun but make no mistake, Texas producers need to stay on high alert along the border, he says.
The TDA said it had not received confirmation that the affected animals reported by SENASICA have a history of movement outside Tamaulipas, raising concerns that the pest may now be spreading naturally rather than being introduced through animal movement. The TDA is also working with USDA and animal health partners and urges Texas producers, especially those along the border, to take preventive action now. Producers should be checking livestock every day and treating any wound as a potential entry point, says Miller. Pay close attention to navels on young animals, isolate anything suspicious and report concerns without delay. Early detection and aggressive surveillance are how TDA protects Texas livestock, he says. The TDA has expanded surveillance and installed traps at ports of entry and livestock export facilities. The TDA inspectors continue to monitor the traps and sample regularly, which are assessed in partnership with federal agencies.