Week of August 22, 2026

The Week

The Choice cutout pushed to about 386 cents while cash cattle dropped almost $7, and the two moves together handed packers the biggest one-week margin swing in three years. Retailers are buying beef hard for Labor Day and the packer is letting cattle come to him. Washington supplied the other story, with Trump allowing 300,000 metric tons of tariff-free beef imports and defending a pause on beef tariffs against angry ranchers.

Supply Picture

The cattle-cutout spread more than doubled to about $437 a head, half of it the cutout and half cheaper cattle. That puts implied margins at roughly $37 to $187 a head on the week: profitable on every plausible plant cost, the first week that has been true since early April. The four-week average spread is about $238, still short of plant cost, and that is where the packer actually stands: plants were losing money last week and one good week pulls that back toward breakeven, not into clover. Last August did the same thing on the Labor Day ad run, so treat it as seasonal until it survives them. A packer earning that has no reason to bid up, futures under cash agree, so cash stays soft while the cutout does the work.

The latest final kill came in near 506,000 head, about 5.8% under last year. Carcasses are running heavy, so the hole in supply is lean trim, which is what those imports are. Mexican cattle start crossing at Douglas under screening on Monday, August 24; Sonora logged its first screwworm case this week and USDA held the date. That is 2027 feeder supply, not beef this year.

Demand Situation

We called ground beef 81% and 73% lower last week and both have run up close to 10% since. Wrong, and here is what beat us: grocers threw the holiday ad page at grind, and rib went with it. Retail buying pulled the lean end back up before the slide could finish. The same rib ads are why calling ribeye soft earlier this month did not work.

Strip loin is on track from the August 15 call and we are leaving it there. The openings in beef are flank steak and top butt, down about 16% and 13% over four weeks. Nothing in beef is cheap for August. Those two are simply the only cuts handing a buyer a better number than a month ago, so that is where you fill. One more for the middle-meat buyer: Choice is abundant and the Choice-Select spread is about $24, so Select middles are the discount the ad run has not closed.

Pork Market

Bellies print near 189, slightly under last week, so 191 was the high for now and the take-the-win verdict stands. Hams are still the cheap end, and rollout ham keeps grinding lower against the season. Last week's firm call on it was pulled: the quote it leaned on was a thin print, not a market, and it stays off the card. Pork packers sit right on breakeven, between negative $3 and positive $5 a head, so nobody has room to discount.

Chicken Market

Leg quarters fell about 3.4% on the week to near 53 cents and are the only chicken item still priced full for this time of year. Breast, tenders and wings all trade well below normal. Buy quarters hand to mouth. For the beef buyer, chicken picked up roughly 9,000 feature stores this week with parts taking most of it, so the cheap end of the meat case is still pulling the consumer dollar even with beef ads up.

Summary

Expect the cutout to hold firm through the Labor Day ad run and cash cattle to stay soft, because packers earning this spread do not need to chase cattle. Buy grind through the holiday and no further. Those 300,000 tonnes of tariff-free imports land on the lean end, and lean is carrying the widest premium anywhere in the beef complex right now. New call: pork 72% trim combo firms over the next two weeks. It sits deep in the discount bucket, it is falling slower than the hams, and packers at breakeven cannot sell it cheaper. Watch the clearance rate on those imports: if that beef moves quickly, lean breaks before Labor Day and drags the cutout with it.