Key Takeaways
- • Hales Trading estimates beef packer margins declined about $25 per head last week, though they remained positive for a ninth consecutive week at roughly $80–$110 per head.
- • The comprehensive boxed beef cutout rose just $0.15 to $376, remaining near the $375–$380 range it has held for several weeks, and was $9.48 above the same week last year.
- • Forward contracts for November are estimated at 116,772 head versus 166,031 a year earlier, and Hales expects packers may cut slaughter to 533,000–543,000 head this week to reduce cutout pressure.
- • Export sales of 1,299 loads represented 18.62% of total boxed beef production, the highest since January, with year-to-date export volume up 2.9%.
- • Hales sees fed cattle prices potentially exceeding $230 in coming weeks on lower November–December supplies, which could push packer margins from positive to negative.
Summary
Hales Trading Co.'s daily cattle letter reports that beef packer margins came under pressure last week as cattle prices climbed while the boxed beef cutout barely moved. According to the letter, the comprehensive cutout increased $0.15 to $376 for the week, a figure $9.48 above the same week last year. The cutout has been relatively flat for several weeks, trading between $375.85 and $380.02 since peaking at $384.01 during the week of August 29. Hales attributes the cutout's stagnation to ongoing reports of problems in ground beef and cuts that go into the grind, which it says are weighing on prices.
On the cattle side, the weighted average fed cattle price rose from $221.61 to $225.64 after a $1.50 increase in the average Nebraska cattle cost. Combined with the minor cutout gain, Hales estimates packer margins fell about $25 per head, leaving them positive at $80–$110 per head for a ninth straight week.
Hales reports today's slaughter estimate at 105,000 head versus 106,000 a week earlier, with the weekly estimate at 553,000 head. The letter says there is too much beef in the pipeline and expects packers to cut slaughter rates this week, with estimates in the 533,000–543,000 head range. Cow slaughter appears to have risen by 7,000–8,000 head week over week, which Hales says could ease pressure on some cuts while adding downward pressure on 90% lean beef.
Forward contracting is markedly lower than last year. Coming into October, forward contracts totaled 117,568 head versus 172,537 head a year earlier, and November contracts are estimated at 116,772 head compared with 166,031 last year. Export demand was a notable support: boxed beef export sales rose 314 loads to 1,299 loads, the second-highest weekly volume of the year and 609 loads above the same week in 2025. Year-to-date exports reached 33,295 loads, up 2.9% year over year. Exports accounted for 18.62% of total boxed beef production, the highest share since January 24 at 19.13%.
Looking ahead, Hales says it expects lower fed cattle supplies in November and December, and it would not be surprised to see fed cattle exceed $230. Higher cattle prices alongside steady-to-lower cutout values would likely push packer margins from positive to negative. The letter also flags managed money liquidation in cattle futures as a concern for a bullish futures rally, and projects December futures could rise to $230 to fill a gap left in July.
On the cattle side, the weighted average fed cattle price rose from $221.61 to $225.64 after a $1.50 increase in the average Nebraska cattle cost. Combined with the minor cutout gain, Hales estimates packer margins fell about $25 per head, leaving them positive at $80–$110 per head for a ninth straight week.
Hales reports today's slaughter estimate at 105,000 head versus 106,000 a week earlier, with the weekly estimate at 553,000 head. The letter says there is too much beef in the pipeline and expects packers to cut slaughter rates this week, with estimates in the 533,000–543,000 head range. Cow slaughter appears to have risen by 7,000–8,000 head week over week, which Hales says could ease pressure on some cuts while adding downward pressure on 90% lean beef.
Forward contracting is markedly lower than last year. Coming into October, forward contracts totaled 117,568 head versus 172,537 head a year earlier, and November contracts are estimated at 116,772 head compared with 166,031 last year. Export demand was a notable support: boxed beef export sales rose 314 loads to 1,299 loads, the second-highest weekly volume of the year and 609 loads above the same week in 2025. Year-to-date exports reached 33,295 loads, up 2.9% year over year. Exports accounted for 18.62% of total boxed beef production, the highest share since January 24 at 19.13%.
Looking ahead, Hales says it expects lower fed cattle supplies in November and December, and it would not be surprised to see fed cattle exceed $230. Higher cattle prices alongside steady-to-lower cutout values would likely push packer margins from positive to negative. The letter also flags managed money liquidation in cattle futures as a concern for a bullish futures rally, and projects December futures could rise to $230 to fill a gap left in July.
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