By Andi Anderson
In a high-price cattle market, traditional basis forecasting methods are being challenged by unusual price relationships, particularly between calves and feeder cattle. As herd sizes shrink during the cattle cycle, calf prices rise relative to feeders, impacting profit margins and price expectations.
Basis—the difference between local cash and futures prices—is often forecasted instead of cash prices because futures markets already reflect national price expectations. The formula used is:
Basis = Cash Price – Futures Price
To forecast cash prices, the reverse is used:
Cash Price = Futures Price + Expected Basis
Under typical conditions, using a 3- to 5-year historical basis average helps predict this difference. However, in 2025, Arkansas cattle basis data reveals that historical averages don’t hold up, especially for 500–600 lb calves, where basis is now much stronger than normal.
Figures show that both light and heavy steers are behaving differently in the current cycle. Calves tend to have a stronger and more variable basis, while heavier feeders show less change. Still, the 2025 basis diverges sharply from the past, indicating that forecasts relying only on historical trends could result in significant pricing errors.
Even with record-high prices, producers must focus on margins. Misjudging the basis in this environment can be costly. One solution is to lean more on seasonal price patterns, which remain steadier, and make adjustments based on current herd size trends and market cycles.
Accurate forecasting is more important than ever. As the cattle market evolves, so must the strategies used to interpret it. Understanding how basis shifts in a high-price environment can help farmers make better pricing decisions and protect their operations.
Photo Credit: gettyimages-ahavelaar
Categories: Ohio, Business