by Andrew Griffith, Livestock Marketing Specialist
January 16, 2026
FED CATTLE
Fed cattle traded steady this week compared to a week ago on a live basis. Prices on a live basis were mainly $232 to $233 while dressed prices were mainly $365.
The 5-area weighted average prices thru Thursday were $234.45 live, up $3.03 compared to a week ago and $362.00 dressed down $2.99 compared to last week. A year ago, prices were $203.56 live and $321.49 dressed.
The 5-area weighted average prices thru Thursday carry little value this week because they only represent about 1,500 head of cattle. Cattle feeders and packers were struggling to get business done this week as the never-ending tug of war continued. Cattle feeders certainly thought they were going to be able to squeeze a few more dollars out of packers compared to last week as live cattle futures increased the first couple of days this week, but the market fell hard on Friday, which provided packers a small slice of leverage or at least something to support bidding lower for cattle. Many of the price movements the next several months will be large and sporadic at best. Any positive or negative information can be a major price mover.
BEEF CUTOUT
At midday Friday, the Choice cutout was $361.91 up $1.14 from Thursday and up $6.67 from a week ago. The Select cutout was $360.30 up $0.59 from Thursday and up $8.86 from last week. The Choice Select spread was $1.61 compared to $3.80 a three weeks ago.
It is extremely difficult to turn a profit when the primary output (beef) is being sold for less than the primary input (cattle). If a packer is paying $365 plus per hundredweight for a steer on a dressed basis and then turns around and sells Choice boxed beef for $362 per hundredweight then it is likely they are bleeding red ink all over the place unless the workforce is paying to work for the packer. The simple fact here is that packers are working off a negative margin to start the process and then have the cost of slaughter and fabrication to compound the losses. A business can only operate at this level for certain amount of time with the hope prices will eventually produce a positive margin. Beyond that hope, it would seem inevitable for further consolidation in the packing industry. This could take the form of permanent plant closures, shuttering of plants, reduction in shifts, or other types of restructuring to reduce costs and improve production efficiency. Time will reveal what has to happen for packers to find a profit.
OUTLOOK
Based on Tennessee weekly auction market averages, steer prices were $6 to $18 higher this week compared to last week while heifer prices were $6 to $17 higher than a week ago. Slaughter cow prices were $2 to $5 lower compared to the previous week while slaughter bull prices were $3 to $4 lower than one week ago. The technical term for calf prices right now is “silly”. Calf prices have shot through the ceiling to begin 2026, and there are no signs of slowing at this point. As the market continues to move toward grass cattle turnout in March, one can only expect calf prices will continue to push higher as cattle buyers are competing for fewer animals to place on similar forage resources as one year ago. Due to cost of gain in the feedlot being relatively inexpensive, several feedlots are also competing for these lighter weight grass cattle. The grass producer thought is all forage resources need to be utilized via grazing cattle, but there may not be enough cattle to achieve that goal across all producers unless cattle are grazed longer. Despite the cost of gain in the feedlot being relatively low, grazing operations generally still have a lower cost of gain than the feedlot, which gives them more dollars to continue bidding on cattle. This brings up the thought that land and forage tend to be the most limiting resource for many producers. However, capital could be the limiting resource this year even if cattle can be secured. With the ever-increasing price of calves, many producers will be forced to extend their lines of credit to purchase cattle or simply purchase fewer cattle. At the same time, the increased purchase price will result in a higher interest expense for each animal. This interest expense may be further expanded if a producer chooses to keep cattle on grass longer than what is typical. The basic thought here is that cattle production is becoming more expensive, which means more capital is needed to operate. Producers should consider this as they think through their cattle production plan.
ASK ANDREW, TN THINK TANK
This is more of a public notice than answering a question though a question was asked this week about cattle budgets for 2026. The Department of Agricultural and Resource Economics produces several publications each year. Those publications include cow-calf, stocker, and row crop budgets, Tennessee feeder cattle basis, seasonal cattle prices, the buy/sell margin calculator, and several more. These publications are produced to assist market participants in planning for the new year and marketing throughout the year. In reference to enterprise budgets, producers are encouraged to utilize the Excel based livestock budgets to adapt them as closely as possible to their operation. If cattle prices maintain current levels, then producers are likely to experience windfall profits again in 2026 as they did in 2025. A budget can help project what those profits will be and thus provide information concerning income tax burden. Now is the time to think through income tax purchases for 2026 instead of making desperation purchases in December.
Please send questions and comments to agriff14@utk.edu.
FRIDAY’S FUTURES MARKET CLOSING PRICES
Friday’s closing prices were as follows: Live/fed cattle –February $232.15 -3.90; April $233.98 -4.45; June $229.60 -4.30; Feeder cattle –January $361.93 -6.50; March $356.45 -8.10; April $354.90 -8.03; May $352.28 -7.75; March corn closed at $4.25 down 5 cents from Thursday.