by Matthew Diersen, South Dakota State University

Cattle prices have been quite volatile for several months. Several times this fall, there were anecdotes about large margin calls. From a risk management perspective, that generally meant producers were hedged, and then prices increased. It also brought a few hints at missing out on higher prices. Here are a few aspects that warrant attention going forward.

The cash market has not been quite as volatile day-to-day as the futures market. A lot of calves have traded at very high prices and thus present a lot of risk to the buyers.

The feeder-cattle futures board has seen gaps and limit moves during this stretch. Remember that the feeder contracts are cash-settled. The feeder-cattle index peaked Oct. 16, 2025, at $376.61, a couple of weeks ahead of the October contract expiring. The new nearby is the January 2026 contract, which will not expire until the end of January. Last week, that contract briefly traded below $300.00 per hundredweight (cwt.). For those trying to hedge feeders in the short run, convergence will need to be considered.

Replacements were not immune to high prices. Heifers generally trade at a sharp discount to steers of the same weight in feeder-cattle markets, reflecting slower rates of gain and lighter eventual finishing weights. Replacement heifers, however, can break that pattern and be priced at a premium to steers, especially late in a cattle cycle.

From late October through much of November 2025, heifers described as replacements traded at a slight premium to steers across sale locations in South Dakota reported by the Agricultural Marketing Service (AMS). The comparison was made when looking at Medium and Large No. 1 animals weighing 500-600 pounds (lb.). Such heifers will not have a marketable calf until 2027, thus reflecting substantial risk as an investment and widespread optimism about continued profitable calf prices.