Live cattle futures are rallying, with contracts up to $2.75, alongside significant gains in feeder cattle futures. This upward momentum is primarily driven by a revised USDA WASDE forecast indicating a 170 million pound reduction in expected 2025 beef production and ongoing lower cattle slaughter rates compared to last year, signaling tighter near-term supply. Despite limited cash trade and mixed wholesale boxed beef prices, the market is reflecting bullish sentiment on future supply constraints.
Live and feeder cattle futures are experiencing a significant rally, with contracts gaining between $2.00 and $2.75 at midday. This bullish momentum is primarily fueled by a fundamental shift in supply expectations, as the latest USDA WASDE report revised the 2025 beef production forecast downward by 170 million pounds to 26.188 billion lbs. The tighter supply outlook is corroborated by current slaughter data, with the weekly total of 464,000 head running 15,228 head below the same week last year. However, the physical market shows some divergence from the futures rally; cash trade remains limited, and a recent Fed Cattle Exchange auction saw no sales on 928 head with bids at just $225. Furthermore, wholesale boxed beef prices present a mixed picture, with Choice boxes declining by $1.11 while Select boxes increased by $1.52, narrowing the spread and potentially indicating price sensitivity. Importantly for the longer-term outlook, the USDA projects a rebound in 2026 production, raising its forecast by 540 million pounds, which may temper the duration of the current supply squeeze.
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moderately positive
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0.50
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