Cattle market shifts as formula contracts impact cash bidding

The cash cattle market is experiencing significant shifts due to the rise of unpriced formula contracts. According to USDA data, formula purchases increased from 33.2 percent in 2005 to 63.3 percent in 2025, while negotiated cash purchases dropped from 52.1 percent to 17.8 percent during the same period.

These unpriced contracts allow packers to commit cattle before a base price is established. This practice can weaken competition in the negotiated cash market, as packers can draw on contracted supplies rather than bidding aggressively for available cattle. Such arrangements may provide financial incentives for packers to keep cash prices low, as lower benchmarks reduce payments on existing contracts.

In recent midday livestock market reports, activity in the fed cash cattle trade remained relatively quiet. In Kansas, bids were noted at $226, while light trade occurred in the North at $345 to $350. In Nebraska, the Ogallala Livestock Auction saw calves and feeders trading higher than two weeks prior, supported by good to moderate demand.