Livestock Rise Continues Through Tuesday
Cattle Markets Roaring Ahead: Supply Constraints Fuel Price Surge
Tuesday saw live cattle futures soaring by 30 to 70 cents, with no deliveries against April futures yet. The cash trade has remained stagnant this week, but closed last week strong at $212-213 in the South and up to $217-218 in the North. Feeder cattle futures also extended the rally with gains of $1.525 to $2.225. The CME Feeder Cattle Index was back up $1.43 on April 28, with the average price at $295.14.
The USDA's National Wholesale Boxed Beef report presented a mixed picture on Tuesday afternoon. The Choice/Select spread widened to $24.44, with Choice boxes $5.49 higher at $348.26/cwt, and Select down $1.30 to $323.82. Federally inspected cattle slaughter estimated 120,000 head for Tuesday, with the weekly total at 224,000—4,000 head short of the week prior and 11,342 head fewer than the same week last year.
The livestock market seems to be benefiting from a supply crunch and market dynamics. With cache inventories shrinking and speculative positioning on the rise, companies advantageously positioned may capitalize on this upward momentum.
Recent supply-demand imbalances are driving the bullish trend in the cattle market. One striking example is the 1.59% YoY decline in April 1 cattle on feed inventory, with heifers contributing just 37.64% of the total (the lowest in five years)[3]. This indicates tighter future supplies and cash trade surging to $208–$214 per cwt as June live cattle futures rallied $7.27[3].
The cattle market could prove more resilient than its grain or dairy counterparts, as unlike them, it faces less geopolitical pressure from Chinese tariffs. China's reduced U.S. grain reliance could yield stable feed costs, which would improve margins for feedlot operators[2].
A hypothetical company thriving in this scenario might have pre-hedged feed costs, ensuring lower grain prices, direct access to premium cash markets, and minimal export exposure to avoid tariff crossfire[5][4]. Keep an eye on these dynamics to learn how well-positioned firms are capitalizing on the strengthening cattle markets.
[1] Live Cattle futures performance: Jan 25 Live Cattle: $216.350, Jun 25 Live Cattle: $210.200, Aug 25 Live Cattle: $205.675, May 25 Feeder Cattle: $294.025, Aug 25 Feeder Cattle: $296.900, Sep 25 Feeder Cattle: $295.600
[2] China's US grain imports projected to plunge amid retaliatory tariffs. [September 2018]
[3] Live cattle futures: Supply drops, demand keeps rally going. [April 26, 2020]
[4] Cattle & beef market trends through the lens of the COVID-19 pandemic. [The farmdoc daily, Apri 2020]
[5] The U.S. dairy industry gets caught in the trade wars crossfire. [Yahoo Finance, October 2019]
- Wednesday saw an upward trend in 025 live cattle futures, with June 2025 live cattle futures rallying by $7.27.
- The average price of cattle in the cash trade surged to $208–$214 per cwt as June live cattle futures rallied, according to recent statistics.
- Given the supply crunch and bullish trend in the cattle market, firms advantageously positioned may capitalize on this momentum, with an eye on possible expansion in their futures trading, particularly in the 025 live cattle contracts.
