Key Takeaways
- • Choice cutout closed at $369.47/cwt on Oct. 22, down $3.12 from Wednesday, while select fell $4.93 to $350.41, according to Hales Trading Co.'s daily cattle letter.
- • Daily cattle slaughter estimate was 103,000 head, with week-to-date slaughter of 430,000 head unchanged from last week; Hales expects packers to cut slaughter to roughly 533,000-543,000 head this week, versus an on-track pace of 553,000.
- • Mexican feeder cattle crossings are running well ahead of USDA Foreign Agricultural Service forecasts: 41,485 head crossed through the week of Oct. 12 against a 2026 estimate of 45,000 head, and a new port opens Oct. 26.
- • Steer carcass weights reached 986 pounds during the week of Oct. 10, within 2 pounds of the 2025 peak of 988 pounds.
- • Hales views the December cattle futures rally of more than $20 as a top and warns that cash trade above $230 would push packers into losses, signaling the need for slaughter cuts.
Summary
Beef packers face mounting pressure as the wholesale cutout continues to decline, according to the Hales Cattle Letter published by Hales Trading Co., Inc. The choice cutout finished Oct. 22 at $369.47, down $3.12 from Wednesday, and select closed at $350.41, down $4.93. For the Monday-through-Thursday period, the average choice cutout was down $3.56, while select was up $2.08. Week-to-date boxed beef volume stood at 305 loads, compared with 318 a week earlier.
Hales estimated Thursday's cattle slaughter at 103,000 head, versus 104,000 the prior Thursday. Week-to-date slaughter of 430,000 head was unchanged from last week, putting the weekly pace at 553,000 head. Hales doubts packers will reach that level because a kill of that size would add significant downward pressure on the cutout. It hears estimates in the 533,000-543,000 range and expects packers to reduce slaughter to limit the decline. Hales also noted that cow slaughter may have risen by 7,000-8,000 head week over week, which could ease some pressure on certain cuts, while adding downside to 90% lean beef and peeled fed-cattle knuckles.
Hales said price lists continue to show reductions on lower-priced items, with push lists remaining large. Its sources report a packer bid of $228 in Kansas that drew no sales, and USDA reported no sales in major cattle-feeding states that day. USDA is set to combine Texas, New Mexico, Oklahoma, Kansas and Colorado in its next price reporting, a change Hales criticized as disingenuous given how quickly market participants learn trade details.
On cattle imports, Hales noted that USDA's Foreign Agricultural Service had forecast Mexican feeder cattle exports would fall 80% to 45,000 head in 2026 and rise 233% to 150,000 head in 2027. Actual crossings through the week of Oct. 12 reached 41,485 head, and another port opens Oct. 26. Hales suspects the 2027 estimate will be exceeded. Mexico has also shipped 210,070 metric tons of beef into the U.S. since Jan. 1, up 20% from 2025.
Steer carcass weights rose 3 pounds to 986 pounds in the week of Oct. 10, 7 pounds above 2025 and 26 pounds above 2024. Hales noted that El Niño may increase moisture in the southern cattle-feeding region, potentially limiting further weight gains. In the December futures market, Hales characterized Wednesday's action as a top following a rally of more than $20 and noted overbought technical readings, with some indicators giving sell signals.
Hales estimated Thursday's cattle slaughter at 103,000 head, versus 104,000 the prior Thursday. Week-to-date slaughter of 430,000 head was unchanged from last week, putting the weekly pace at 553,000 head. Hales doubts packers will reach that level because a kill of that size would add significant downward pressure on the cutout. It hears estimates in the 533,000-543,000 range and expects packers to reduce slaughter to limit the decline. Hales also noted that cow slaughter may have risen by 7,000-8,000 head week over week, which could ease some pressure on certain cuts, while adding downside to 90% lean beef and peeled fed-cattle knuckles.
Hales said price lists continue to show reductions on lower-priced items, with push lists remaining large. Its sources report a packer bid of $228 in Kansas that drew no sales, and USDA reported no sales in major cattle-feeding states that day. USDA is set to combine Texas, New Mexico, Oklahoma, Kansas and Colorado in its next price reporting, a change Hales criticized as disingenuous given how quickly market participants learn trade details.
On cattle imports, Hales noted that USDA's Foreign Agricultural Service had forecast Mexican feeder cattle exports would fall 80% to 45,000 head in 2026 and rise 233% to 150,000 head in 2027. Actual crossings through the week of Oct. 12 reached 41,485 head, and another port opens Oct. 26. Hales suspects the 2027 estimate will be exceeded. Mexico has also shipped 210,070 metric tons of beef into the U.S. since Jan. 1, up 20% from 2025.
Steer carcass weights rose 3 pounds to 986 pounds in the week of Oct. 10, 7 pounds above 2025 and 26 pounds above 2024. Hales noted that El Niño may increase moisture in the southern cattle-feeding region, potentially limiting further weight gains. In the December futures market, Hales characterized Wednesday's action as a top following a rally of more than $20 and noted overbought technical readings, with some indicators giving sell signals.
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