Cattle Posting Mixed Action Ahead of Cattle on Feed Report

Live cattle futures are mixed, with near-term contracts slightly up and deferred contracts down as much as $0.30, while feeder cattle futures are trending upward $0.30-$0.60; cash trade is reported between $224 and $231 live. Boxed beef prices continue to rise, with Choice boxes at $361.79 and Select at $351.05 per hundred pounds, contributing to a Choice/Select spread of $10.74. The market anticipates the monthly Cattle on Feed report this Friday, with expectations for lower April placements and marketings, and a reduced on-feed number for May 1.

Analysis

Live cattle futures present a mixed picture at midday, with the June contract showing a marginal gain (up $0.025 to $215.650) while deferred contracts, such as October 25 Live Cattle, are down by up to 30 cents (to $207.925). Cash cattle trade has commenced with prices reported at $230-231 for live sales in the northern regions and $360-370 for dressed, while Kansas saw sales between $224-229. In contrast, feeder cattle futures are experiencing gains ranging from 30 to 60 cents, with August 25 Feeder Cattle up $0.325 to $300.100, and the CME Feeder Cattle Index rising 31 cents to $295.69 as of May 21. Market participants await the monthly Cattle on Feed report, due Friday afternoon, with pre-report estimates indicating a 3.2% year-over-year decrease in April placements, a 2.3% decline in marketings, and a 1.5% reduction in cattle on feed as of May 1. Supporting the market, USDA’s National Wholesale Boxed Beef prices continue their upward trajectory; Choice boxes increased by 82 cents to $361.79 and Select boxes rose $2.10 to $351.05, maintaining a Choice/Select spread of $10.74. Federally inspected cattle slaughter for the week reached 471,000 head, an increase of 12,000 head from the prior week but down 8,832 head compared to the same week last year, suggesting some near-term processing recovery but still lagging year-ago levels. The market will observe a closure on Monday for Memorial Day, with government reports also delayed.

Key Decisions for Investors

• Investors should closely monitor the upcoming Cattle on Feed report, as the anticipated reductions in placements and on-feed numbers could signal tightening supplies and provide bullish support for prices if realized.
• The continued strength in wholesale boxed beef prices, particularly the rise in both Choice and Select grades, indicates robust end-product demand which may underpin cattle values and warrants ongoing assessment.
• Given the mixed performance in live cattle futures juxtaposed with firmer feeder cattle and positive beef price trends, traders might consider strategies that account for potential supply constraints if confirmed by the report, while being mindful of trading dynamics in the holiday-shortened week.