The negotiated cash market is where producers and packers bargain directly over price. Those transactions also establish benchmarks used to price cattle sold through other arrangements.
But as more cattle are committed in advance through unpriced formula contracts, fewer remain available for independent cash bidding. Packers can draw on contracted supplies before buying cash cattle, reducing their need to compete in the market that establishes their contract prices.
USDA data show formula purchases increasing from 33.2% in 2005 to 63.3% in 2025. Over the same period, negotiated cash purchases fell from 52.1% to just 17.8%.
These arrangements can also discourage aggressive bidding. A higher cash bid can raise payments on cattle already secured under contract, while a lower benchmark reduces those payments. The consequences reach beyond the feedlot, as lower returns on finished cattle can reduce what feeders pay for feeder cattle, transmitting harm to stocker operators and cow-calf producers.
R-CALF USA’s position is clear: Contracts that bind producers before establishing a base price, then tie that price to future negotiated cash transactions, should be prohibited.
Packers and feeders can retain the benefits of a contractual relationship with a known base price. Requiring a firm base price preserves those benefits while protecting the producer’s opportunity to compare competing offers before committing cattle.
Congress should put these protections into law, while USDA and the Justice Department pursue the actions available under existing law.
Establish the base price while producers can still seek another buyer. Preserve contractual benefits and restore bargaining power throughout America’s cattle industry.
Do you think cattle should have a firm base price before a producer commits them to a packer?
Watch 📷: Unpriced Contracts: How Packers Weaken the Cash Cattle Market