Cattle Face Pressure into the Weekend

Live cattle futures closed Friday with losses of $0.57 to $1.40 (February was $2.40 higher on the week) while feeder cattle futures fell $3.35–$4.30 on Friday despite January being modestly higher on the week; cash trade was firmer this week with most of the country trading around $230. The CME Feeder Cattle Index rose $1.30 to $346.77 and CFTC Commitment of Traders data (as of Nov. 18) show speculators trimmed their net long by 3,934 contracts to 97,331 while managed money held a net long of 17,430 in feeder contracts. USDA boxed beef was mixed—Choice $357.44 (-$0.67), Select $344.22 (+$0.76), Chc/Sel spread $13.22—and federally inspected slaughter was estimated at 589,000 head (down 4,000 w/w and 15,032 y/y), a supply signal that, coupled with firm cash, may help support cattle prices despite recent futures weakness.

Analysis

Live cattle futures finished Friday with intraday losses of $0.57 to $1.40 while the February contract was $2.40 higher on the week, and feeder cattle futures fell $3.35–$4.30 on Friday despite January being a nickel higher for the week. Cash trade showed firmness with most of the country trading around $230, illustrated by Dec 25 Live Cattle settling at $229.800 (down $0.575) and Jan 26 Feeder Cattle at $339.100 (down $4.300), indicating a divergence between spot cash strength and nearby futures weakness.

The CME Feeder Cattle Index rose $1.30 to $346.77 on Dec. 10, while USDA boxed beef was mixed: Choice $357.44 (-$0.67), Select $344.22 (+$0.76) and a Choice/Select spread of $13.22. USDA federally inspected slaughter was estimated at 589,000 head (down 4,000 w/w and 15,032 y/y), a supply contraction that supports cash markets even as futures pulled back.

CFTC data (as of Nov. 18) show speculators trimmed net longs by 3,934 contracts to 97,331, and managed money held a net long of 17,430 in feeder contracts, signaling crowded positioning that could exacerbate futures volatility. The combination of firm cash, tighter slaughter, mixed boxed-beef signals and large speculative longs suggests futures may remain sensitive to weekly supply/demand prints and positioning shifts.

Key Decisions for Investors

• Consider trimming near-term long futures exposure or layering put protection given Friday's futures declines despite firm cash,
• Monitor USDA weekly slaughter figures and Choice/Select boxed-beef prints closely—continued lower slaughter and a narrowing spread would reinforce cash support and could create basis trading opportunities,
• Watch CFTC positioning (specs ~97,331 net long and managed-money net long 17,430 in feeders) before adding leveraged long futures exposure; wait for de-risking of speculative longs or clear technical confirmation such as sustained weekly gains in Feb contracts