Cattle Mixed at Midday, With Feeders Showing Gains

Live cattle futures showed mixed performance, with front-month gains contrasting with weakness in back months and light cash trade at $230, a $2-5 decline from last week. Concurrently, feeder cattle futures posted gains of $1.25-$2.20, while wholesale boxed beef prices were mixed, narrowing the Choice/Select spread to $17.36. Notably, weekly cattle slaughter was 461,000 head, down significantly by 30,285 from the same week last year, indicating tightening supply amidst current market uncertainties and mixed price signals.

Analysis

Live cattle futures are showing mixed action on Friday, with contracts up 42 cents to weakness in back months. The Friday morning Fed Cattle Exchange showed no sales on the 2,552 head listed, with a few bids of $230-232. Outside of that, there has been some light cash trade at $230 in the North, down $2-5 from last week. Dressed trade was reported at $360. Feeder cattle futures are trading with $1.25 to $2.20 gains across most contracts on Friday. The CME Feeder Cattle Index was back down $3.08 at $361.63 on October 1. USDA Wholesale Boxed Beef prices were mixed in the Friday morning report, with the Chc/Sel spread narrowing to $17.36. Choice boxes were down 27 cents at $362.95, while Select was $2.19 higher to $345.59. USDA federally inspected cattle slaughter for Thursday was estimated at 113,000 head, with the weekly total at 461,000 head. That was 5,000 head below last week and 30,285 head below the same week in 2024. Oct 25 Live Cattle are at $230.525, up $0.000, Dec 25 Live Cattle are at $233.900, up $0.425, Feb 26 Live Cattle are at $235.925, down $0.025, Oct 25 Feeder Cattle are at $356.500, up $2.200 Nov 25 Feeder Cattle are at $354.350, up $1.950 Jan 26 Feeder Cattle are at $348.425, up $1.250 On the date of publication, Austin Schroeder did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. The cattle market is presenting a mixed and diverging set of signals. While live cattle futures are exhibiting weakness in back months and the physical cash market has softened, with trade reported at $230 representing a $2-5 week-over-week decline, the feeder cattle market is showing significant strength. Feeder cattle futures posted gains ranging from $1.25 to $2.20, indicating strong demand for placement cattle. This bullishness in feeders is underpinned by a critical supply-side signal: federally inspected cattle slaughter for the week is down 30,285 head compared to the same week last year. This substantial year-over-year reduction in slaughter points to a fundamentally tighter supply environment. In the downstream wholesale market, boxed beef prices were mixed, with Choice boxes down $0.27 while Select boxes rose $2.19, narrowing the Choice/Select spread to $17.36. This narrowing could suggest a shift in demand towards lower-priced cuts, a factor that may influence processor margins and the price ceiling for finished cattle.

Key Decisions for Investors

• Monitor the significant year-over-year decline in cattle slaughter as a primary bullish fundamental, as this tightening supply is likely to provide price support for deferred contracts despite current cash market weakness.
• Consider the divergence between strong feeder cattle futures and weaker live cattle prices, which may signal a future margin squeeze for cattle feeders and present opportunities for spread trades.
• Acknowledge the near-term bearish pressure from soft cash trade at $230 and inactive exchange sales, warranting caution for long positions in front-month live cattle contracts until the physical market stabilizes.