THE Memorial Day holiday long weekend is now behind the market and it appears that beef retail demand was softer than expected. Packers will be hoping that June produces stronger results and that last week’s holiday-shortened production will boost boxed beef cutout values and help fed beef processors to keep reducing their losses. Those losses last Thursday were a negative $266. 90 per head, according to HedgersEdge.com. But that was lower than the $323.02 per head average loss the week before last.
Packers continue to struggle to buy live cattle at lower prices. The week before last saw the 5-area steer prices average $260.49 per cwt live or $410.24 dressed. These were down $0.36 per cwt and $0.83 per cwt, respectively, from the week before. Trade last week was largely inactive through Wednesday, with only 155 head reported sold at $405 per cwt dressed in Iowa-Minnesota.
Meanwhile, fed cattle graded a record high percentage of Prime and Choice for the 12th week in a row. For the week ended May 16, cattle graded 15.42% Prime and 73.20% Choice. Carcass weights remain at record levels for this time of year. In the week ended May 16, steer weights averaged 976 lbs, down 9 lbs from the prior week but up 38 lbs from the same week last year. Heifer weights averaged 895 lbs, down 5 lbs from the prior week but up 28 lbs from the same week last year. Overall weights averaged 896 lbs, down 6 lbs from the prior week but up 27 lbs from the same week last year.
Exports Showed Big Spurt
The week before last saw a spurt in exports and forward sales from the prior week. The comprehensive cutout (cuts, grinds and trim) averaged $392.82 per cwt, up $1.70 per cwt from the prior week. The Choice cutout averaged $389.95 per cwt, up $2.03 per cwt. Spot market sales accounted for 24.9% of the total volume of 6601 loads of cuts, grinds and trim. Formula sales accounted for 56.8%, forward sales accounted for 18.3% and export sales accounted for 15.4 %. The Choice cutout the first four days last week increased by $2.05 per cwt. There is a seasonal move for exports to increase at this time, says Bob Wilson, HedgersEdge.com. But the 1016 loads reported go against 1252 loads seen for the same week in 2025, a drop of 18.5%, he says.
The expected production cuts of the holiday week may finally allow cutout values to gain traction and to advance prices, says Wilson. But early reads and descriptors for retail activity over the Memorial Day weekend came in as ’okay’ and ’adequate,’ hardly the exceptional readings that were hoped for or needed. The other reports that came in saw lower-priced items move better, as consumers dumbed down celebration items from steaks to hamburgers, from burgers to hotdogs and from beef to chicken wings. The expectations remain that beef cutout values will be able to advance in the near-term. The Father’s Day grilling weekend is four weeks away and the 250th anniversary of the July 4 Independence Day holiday follows quickly from there, he says.
The May 1 cattle on feed report is in the books and the numbers reported have already been absorbed by the market, says Wilson. A deeper dive of analysis makes one hard-pressed to see the report as anything but negative. The growing concern of reduced marketing levels (down 630,000 head for the year and 888,000 head under the five-year average) is compounded in looking ahead, as this month has one less marketing day than last May. Declining marketing levels are one thing with smaller on feed totals and quite another when on feed numbers are increasing, says Wilson.
FRONT END WILL REMAIN HIGH TILL YEAR END
THE number of cattle on feed, particularly those on feed 150 days or more, remains higher than year ago, mainly because marketings remain well above last year. USDA’s latest Cattle on Feed (COF) report showed that the May 1 COF total was11.584 M head, up 208,00 head or 1.8% from May 1 last year. Placements in April totaled 1.702M head, 105.5% of a year ago while marketings at 1.642M head were 90.0% of a year ago. This was the third lowest April marketing level on record, a scant 3000 head above the level in 2015, says Bob Wilson, HedgersEdge.com. The 14.2% marketing rate during April was the second lowest on record. The five -year average marketing rate during April is 15.6%. Through the first four months of the year, marketings were 630,000 head less than in 2025 and 888,000 head less than the five-year average. The last time monthly marketings exceeded the five-year average was January 2025, says Wilson.
Seven states, California up 1%, Idaho up 4%, Iowa up 1%, Kansas up 1%, Nebraska up 2%, South Dakota up 2% and Washington up 4%, had more cattle on feed than a year ago. Nebraska had the most cattle on feed with 2.640M head, with its total up 40,000 head from a year ago. Texas was second with 2.560M head, down 110,000 head, and Kansas was third with 2.360M head, up 20,000 head. Five states, California up 15%, Idaho up 14%, Iowa up 1%, Oklahoma up 13% and Washington up 12% placed more cattle in March than a year earlier. Three states, California up 9%, Idaho up 16% and Washington up 27% marketed more cattle in March than a year ago.
Regarding placement weights, all categories saw year-on-year declines. The under 600 lb category saw 15,000 fewer cattle placed than last year (320,000 head). The 600-699 lb category saw 35,000 fewer cattle placed (250,000 head). The 700-799 lb category saw 40,000 fewer cattle placed (435,000 head). The 800-899 lb category saw 34,000 fewer cattle placed (474,000 head). The 900-999 lb category saw 5000 fewer cattle placed (170,000 head) and the 1000 lbs plus category saw 5000 fewer cattle placed (60,000 head).
Cattle On Feed 180 Plus Days Is Record Large
Front-end cattle supplies of 150 plus days on feed project to remain above the prior year levels into the end of the year, says Wilson. The total on June 1 was an estimated 3.437M head, which would be up 14% on June 1 last year. This supply does not project to drop below 3.25M head through the end of the year. May 1 posted the level of cattle on feed of more than 180 days as record large for any month in any year. The average number of days on feed is back above 200. Recognizing the trend that cattle are consistently finishing and being marketed after more than five months in feedlots, the analysis of cattle on feed 180 plus days should garner attention. From the May peak to the low projected in November, the drop this year is 336,000 head, he says.
The low in these supplies will normally occur in September, dropping 354,000 head, says Wilson. The high level from which the supplies started in May is extending the timeframe for the decline. Also note that the last time November 1 numbers exceeded the trend by more than 500,000 head was in 2015. That year, prices declined 22.2% from the spring high to the fall low. Carcass weight data continues to confirm front-end loaded marketable supplies. Steer weights, heifer weights and average carcass weights each remain at record high levels for this time of year and have moved contra-seasonally back toward all-time high levels when each should be dropping seasonally, says Wilson.
The CME feeder index price continues to hover near the all-time high prices posted in April, says Wilson. From the COVID low in the spring of 2020, the advance has measured a staggering 330%. Despite border closures caused by the specter of New World screwworm to the south and reduced numbers from the north (a result of tariff impacts), the U.S. feeder cattle and calf supply outside feedyards posted higher levels. The April 1 totals were 416,000 head above April 2025 and higher than April 2024. It was the first year-on-year gain during April since 2020. Total cow harvest continues to decline in 2026. The total commercial cow harvest through the first full week in May was down 102,000 head from the previous year, in line with expectations. Dairy cow harvest increased by nearly 56,000 during that time but beef cow harvest was down 158,000 head.
Heifer Retention Has Also Accelerated
Heifer retention has also accelerated since the start of the year, says Wilson. Mother Nature may have a say in any further decisions for slowdowns in female harvesting. As of mid-May, 63% of the cattle inventory was deemed to be in drought impacted regions, as compared to only 26% in mid-May 2025. Given the high price levels received for lean meat and 90s, more movement of cows to market may develop by the end of the year. (Editor’s Note: The price of domestic 90 CL beef set another new record the week of May 23. The price averaged $459.46 per cwt, up from $453.08 the prior week)
The breakeven price levels for cattle feeding looks positive, says Wilson. The current period where estimated break-evens dropped from $250 per cwt down to $220 per cwt (due to the price break seen at Thanksgiving last year) is likely over-compensating for the annual levels. If cattle feeders can lock in current sales prices for the balance of the year, profitability can be maintained. As with most endeavors, timing is everything and discounted futures contracts for the third and fourth quarters make the ability and opportunities to lock in breakeven levels or higher more difficult to achieve. The year-to-date average line shows some risk in the second half of the year, he says.
Retail beef prices scored new highs in April, with USDA’s Choice beef up $0.38 per lb to $10.47 per lb. Ground beef prices were up $0.20 per lb. These were up 18.6% and 19% respectively, from last April. The All-Fresh beef series at $9.64 per lb was 13.4% above year ago. Retail pork and retail broiler prices each remain below year ago levels, says Wilson. The ratios of retail beef prices versus the retail prices of the competing meats have each broken out of the channels defined over the last quarter of a century, emphasizing the price premiums currently carried by beef, he says.
Consumers Adjust Quantities Purchased
As inflation concerns again move to the forefront for consumers and policy makers, consumer reactions have thus far been seen as adjustments made in quantities purchased of higher-end items, says Wilson. Household budgets now made tighter by 90 days of sharply higher gas prices, and with no signs of this changing, are being forced to reallocate funds and reevaluate priorities. Anywhere that viable substitution exists (or in the current vernacular, ‘dumbing-down’ purchases), the consumer dollar is now also shifting to those items. Lesser high-priced quantities are tilting toward no high-priced quantities. Consumer sentiment in May again fell to new all-time low levels, never yet seen in the 70-year history of the University of Michigan survey. But the latest jobs report came in better than expected, with a solid increase in hiring in most sectors. Workers however are expressing growing concerns that finding new jobs, promotions or wage increases are more uncertain, with fewer opportunities. Buyers are being cautious, says Wilson.
Cash cattle prices have moved higher again, setting new all-time price levels, says Wilson. Production generally begets higher prices, although this has not proven to be the case recently for the Choice cutout. From March to April, retail beef prices were up $0.38 per lb while cash cattle prices per Western Kansas advanced $10.90 per cwt. The Choice cutout declined nearly $9 per cwt during this timeframe. Negative margins at the packer level have been the result, approaching the record high level of losses seen last February, he says.
The May 1 COF report had some additional items of notoriety, says Wilson. It showed the first year-over-year increase in COF inventories in 18 months. The May 1 total was also higher than the April 1 total, a measurement seen only twice since 1996, the year the current reporting series began. In 2017, the increase was 79,000 head and in 2023 the increase was 7000 head. It was similar to the increase this year of 8000 head. In the last 180 days, placements have declined 356,000 head from the same timeframe during the previous year, with two months posting above the previous year. Marketings during that same 180-day period were down 803,000 head. The net is an inflow or buildup of 447,000 head. Declining marketing levels are one matter when on-feed totals are declining and marketing rates are maintained. It is quite a different situation and outlook when marketings decline and on-feed totals are increasing, says Wilson.
USDA REDUCES 2026 BEEF PRODUCTION FORECAST
USDA has reduced its annual beef production estimate for 2026, dropping 243M lbs year-on-year to 25.547 billion lbs. This total remains approximately 300M lbs above estimates by HedgersEdge.com, says Bob Wilson. USDA has also projected an increase in beef imports of 638M lbs pounds and a decrease in beef exports of 215M lbs. This roughly 850M lb net increase is added to the total beef supply and is now set to increase per capita meat supplies across all categories of red meat and poultry. The latest negotiations with China are not included in these USDA export numbers, which if the deal is realized, would likely increase, says Wilson.
USDA’s forecast of a slight decline in production in 2027 (down 0.9% to 25.310 billion lbs) is based on fewer cattle slaughtered that is only partially offset by heavier anticipated carcass weights, says USDA’s Economic Research Service (ERS) in its latest Livestock Dairy and Poultry Outlook. This expected decline in cattle slaughter next year is predicated on seven years of declining beef cow inventories, which have led to smaller calf crops each year. This leaves cattle producers a smaller pool of calves from which to designate for the breeding herd or the beef value chain. More specifically, in January USDA estimated that producers retained more heifers for their breeding herds entering 2026 than the prior year. Higher heifer retention is likely to carry over with the 2026 calf crop, which is expected to be smaller. An overall small calf crop and increased heifer retention for breeding will further constrict calf supplies available for placement in feedlots in late 2026 and the first half of 2027, says ERS.
Per Capita Disappearance Will Decline
This supports fewer feedlot cattle marketed for slaughter in 2027, says ERS. In 2027, cow slaughter is also expected to decline as producers are anticipated to favor beef cow retention over culling from historically low beef cow inventories. This situation also supports a lower beef production forecast in 2027. For a historical perspective, 2027 production is forecast to be almost 11% percent lower than the record set in 2022 and at the lowest volume since 2016. Beef exports are forecast to drop to their lowest level since 2015, says ERS. The effect of lower production on domestic disappearance will be partially offset by lower exports and relatively large beef imports, the level of which will be second only to the record import forecast for 2026. As a result, per capita disappearance in 2027 is forecast at 59.2 lbs, a 1.3% decline year over year but above the 10- and 20-year averages, says ERS.
Since last month’s report, steer and heifer marketings for slaughter have slowed below expectations as feedlots still appear willing to add weight to cattle while awaiting higher bids from packers, says ERS. The slower pace of feedlot marketings has kept the percentage of cattle on feed over 150 days historically elevated. With respect to cow slaughter, current pastureland conditions are the worst and the most widespread since the last drought period in 2021–2022. Weekly pastureland conditions are given a score to provide an overall value. A relatively low or declining score suggests that pasture conditions are weakening, says ERS.
Further, 62 % of the cattle inventory on May 12 was in an area experiencing drought, compared to 29% the same week last year and 55% in 2022 says ERS. This may hamper hay production and forage conditions, limiting producers’ ability to expand their herds. While the current forecast assumes normal weather conditions over the summer months, more cows could enter the slaughter mix if drought conditions persist or worsen from the current situation. Regarding cattle prices, ERS says prices in 2027 are expected to be modestly higher than the records currently forecast for 2026. This is based on a smaller anticipated calf crop in 2026 and more heifers retained for breeding to further tighten supplies available for placement in feedlots and for slaughter in 2027. ERS’s forecast for feeder steers weighing 750–800 lb at the Oklahoma City National Stockyards is $382.00 per cwt), a 1% increase from 2026. Its forecast for slaughter steer prices in the 5-area marketing region4 is $253.75 per cwt, a 2% year-over-year increase, says ERS.