USDA Adds New Cattle Report   10/23 14:33

   As Cash Trade Shrinks, USDA Expands Regional Cattle Market Reporting

   USDA's new five-state cash cattle report aims to improve price transparency, 
but analysts say declining negotiated trade and confidentiality restrictions 
continue to challenge price discovery.

Jennifer Carrico
DTN Senior Livestock Editor

   REDFIELD, Iowa (DTN) -- USDA this week announced a new five-state regional 
cash cattle report designed to improve price transparency and provide more 
useful market information to cattle producers and other industry participants.

   The announcement comes as negotiated cash cattle trade continues to shrink. 
What accounted for nearly 50% of fed cattle transactions in 2005 represented 
less than 18% in 2025, raising concerns about price discovery and market 
transparency.

   Brad Kooima, with Kooima Kooima Varilek Trading in Sioux Center, Iowa, said 
the price discovery started way before people even knew what cash cattle were 
worth. "We haven't changed the fact that cash cattle are being sold. Every 
formula has a base price, and now we can more easily set the formula price," he 
said. "I think we have to be careful what we wish for."

   USDA said the new report will provide more detailed information on 
negotiated cash cattle prices for producers, livestock sellers, packers and 
other market participants.

   Starting with the reports published on Monday, Oct. 26, 2026, the 
Agricultural Marketing Service (AMS) will use data collected through the 
Livestock Mandatory Reporting (LMR) system to create an additional cash cattle 
regional report using data from Colorado, Texas, New Mexico, Oklahoma and 
Kansas.

   QUESTIONS REMAIN ABOUT PRICE DISCOVERY

   But cattle market analysts warn that if negotiated cash trade continues to 
shrink and confidentiality restrictions continue to limit reported prices, the 
cattle industry may need a different system for price discovery.

   Kooima said the industry may already be headed in that direction. If the 
market weakens and independent producers cannot meet packers' increasingly 
specific requirements, he said, the result could mirror the 1998 hog market 
collapse that forced many producers out of business.

   Kooima pointed to the growth of beef-on-dairy production as an example of 
increasing vertical integration. "There is control on what is done with those 
cattle from the moment they are born until they are sent to market," he said. 
Beef-on-dairy cattle are made when dairy producers use beef bulls to produce a 
higher-quality beef-type carcass.

   He estimates 1.3 million to 1.5 million head of beef-on-dairy cattle are 
entering feedlots annually. According to Kooima, that supply is replacing a 
significant portion of the feeder cattle that previously came from Mexico 
before import restrictions tied to New World screwworm (NWS) concerns.

   CONFIDENTIALITY STILL CLOUDS MARKET

   Corbitt Wall, cattle market analyst for DV Auction, said the transparency 
has been missing in the southern market for some time since the large feedlots 
in the Southern Plains have been selling fat cattle to packers predominantly 
through contract deals.

   "It's tough for the smaller independent feeders to make decisions in the 
market because they can't see completely what is happening," Wall said. "That's 
why I like the auction market way of selling cattle because it's true price 
discovery."

   Wall said that when LMR started 26 years ago, the industry thought it would 
be easier to see what was happening with these corporate contract deals, which 
he called sweetheart deals. The thought was that LMR would provide more 
information about what was happening in the cattle market, but the opposite 
actually happened.

   "The problem is the corporate feeders want to continue to outdo each other. 
The packers demanded confidentiality since the beginning," he explained. "They 
(the packers) knew how they wanted to take the industry. We'd have to get rid 
of the confidentiality rules to really know what is going on with the 
sweetheart deals between the corporate feeders and the packers."

   Becoming even more transparent is what Wall hopes to see and eliminating the 
confidentiality to know the facts of the deals. But he said the way it is, the 
range of prices in these five states will be reported. The Cattle Contract 
Library Summary, which was started as a pilot program in 2023, was to help 
reveal more information. The Consolidated Appropriations Act of 2022 directed 
AMS to create this Cattle Contracts Library Pilot Program, in which the agency 
collects, maintains, and reports aggregated purchase information on contracts 
between fed cattle producers and packers who are within the reporting 
threshold. But the Library alone hasn't fixed the market imbalances.

   During the COVID-19 pandemic, sending cattle to market became challenging as 
packing plants were slowing production to avoid the spread of the virus. This 
led to cattle being sent to northern plants from southern feedyards to fill 
contract orders. Wall said that COVID was the first time he became aware that 
some formula agreements also included profit-share in the packing plants, and 
that put a whole other layer into the sweetheart deals.

   Wall said the new report is a positive step, but more substantial reforms 
have stalled. He pointed to proposed "50/14" legislation from Sen. Chuck 
Grassley, R-Iowa, first introduced in 2020, which sought to require major 
packers to purchase a minimum 50% of cattle through negotiated cash trade. 
Although later revisions lowered that percentage, the effort ultimately failed 
to gain enough support.

   ANALYSTS SEE NEED FOR ADDITIONAL REFORMS

   Kooima and Wall both agree that receiving a next-day report on weights of 
cattle killed the previous day would help producers to know where the industry 
is moving and what to expect in the markets. "Hogs kill half a million head 
each day and they've received next-day weights since 2001. The packers know 
what they are killing and what the cattle weights are," said Kooima. "It's not 
that complicated. USDA could do this for cattle too, but they have not been 
tasked to do so. It would provide us with some important information as far as 
market prices."

   While both analysts welcomed USDA's new regional report, neither believes it 
fully addresses the industry's long-running concerns over price discovery. For 
Kooima and Wall, the larger debate remains whether cattle markets can continue 
relying on shrinking negotiated cash trade while still providing transparent 
and competitive price signals to producers.

   For more information about markets published by AMS, visit: 
https://www.ams.usda.gov/market-news/livestock-poultry-grain.

   Jennifer Carrico can be reached at jennifer.carrico@dtn.com

   Follow her on social platform X @JennCattleGal




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