Cattle Rallying on Thursday

Live cattle futures are trading higher, with gains ranging from $1.70 to $2.35, supported by reported cash trade at $230-231 live in the north and dressed at $360-370. Feeder cattle futures are also up, gaining $3.17 to $3.30 in the nearbys, while the CME Feeder Cattle Index rose to $297.64 on May 20. Beef export sales totaled 12,276 MT for the week, with Japan and South Korea as top buyers; wholesale boxed beef prices also increased, indicating overall positive momentum in the cattle market.

Analysis

Live cattle futures are exhibiting significant upward momentum, with midday gains reported between $1.70 and $2.35 across contracts; for example, October '25 futures increased by $2.35 to $208.425. This rally is complemented by firm cash market transactions, evidenced by live sales at $230-$231 in northern areas and dressed sales at $360-$370. Feeder cattle futures are also experiencing strong gains, with most nearby contracts up $3.17 to $3.30, such as the August '25 contract rising $3.30 to $299.725, and the CME Feeder Cattle Index advanced by 31 cents to $297.64 on May 20. International demand signals are mixed: beef export sales for the week of May 15 totaled 12,276 metric tons, a decrease from the prior week, though shipments rose to 14,828 metric tons, with Japan and South Korea being key trading partners. Domestically, wholesale boxed beef prices strengthened, with Choice boxes increasing by 71 cents to $360.30 and Select boxes up 44 cents to $348.72, widening the Choice/Select spread to $11.58. Federally inspected cattle slaughter data indicates a weekly increase to 255,000 head, up 16,000 from the previous week, but this figure remains 3,530 head below the comparable week last year, suggesting a potential tightening of supply year-over-year.

Key Decisions for Investors

• Given the strong upward movement in futures, robust cash trade, and rising wholesale beef prices, investors might consider maintaining or initiating bullish positions in live and feeder cattle futures, particularly focusing on near-term contracts reflecting current market strength.
• Traders should closely monitor upcoming export sales figures, as the recent weekly decline to 12,276 MT, if it becomes a trend, could introduce headwinds despite the concurrent increase in shipments and strong domestic wholesale prices.
• The year-over-year decrease in federally inspected cattle slaughter, despite a short-term weekly rise, signals potentially tighter cattle supplies which could offer further price support if consumer and export demand remains resilient.