Cattle Continuing Rally on Tuesday

Live and feeder cattle futures are trading higher on Tuesday, with live cattle up $0.80-$1.05 and feeder cattle gaining $1.45-$1.90, indicating broad strength in the livestock market. This upward momentum is supported by robust feeder cattle auction prices and a rising CME Feeder Cattle Index. While USDA Wholesale Boxed Beef Choice and Select prices declined, the Choice/Select spread widened to $24.33, and Monday's cattle slaughter, at 108,000 head, was up week-over-week but significantly lower year-over-year, suggesting potential supply constraints.

Analysis

The cattle market is exhibiting broad-based strength, with both live cattle futures rising by $0.80 to $1.05 and feeder cattle futures gaining significantly by $1.45 to $1.90. This upward momentum in the futures market is substantiated by fundamentals in the physical market, particularly the strong Oklahoma City feeder cattle auction where steer and heifer prices increased by $8-13 and $10-20, respectively. Further evidence of underlying strength is the CME Feeder Cattle Index's $1.10 increase to $329.93. On the supply side, a key bullish indicator is the year-over-year decline in cattle slaughter, which was down 6,308 head compared to the same Monday last year, suggesting tightening supply. While wholesale boxed beef prices saw a minor retreat, with Choice down $0.88 and Select down $4.33, the spread between them widened to $24.33, indicating resilient demand for higher-quality beef despite the price dip.

Key Decisions for Investors

• The combination of rising futures, strong cash auction results, and tightening year-over-year slaughter rates supports a bullish stance on cattle-related positions.
• Investors should closely monitor weekly cattle slaughter data, as continued lower figures compared to last year would reinforce the tight supply narrative and likely provide further price support.
• Pay attention to the widening spread between Choice and Select boxed beef prices, as this signals strong demand for premium products and could indicate underlying health in the high-end consumer market, benefiting producers of higher-grade cattle.