Cattle Futures Recover and End Week on a Positive Note

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Cattle futures put in an interesting week as cash prices continued to surge and put in new record high prices as traders reacted to rumors put in by news organizations with the source coming from “according to people familiar with the situation.” These same organizations then quickly reversed course with statements of “pressure from industry sources” cause delay in implementation of the rumor. The rumor pressured futures while cash prices were making news all-time high prices as the packing industry desperate for cattle bid up prices in order to get ahold of the limited supply. Meanwhile futures traders, “algorithms”, etc. reacted to the rumor that the President was going to sign an executive order to temporarily get rid of the import quotas and the resulting tariffs that exporters would be socked with once the quotas were reached. The hope was this would bring beef prices down as prices were at/ near all-time high prices. The problem with that is we aren’t sure that would actually result in lower prices. The elimination in excess tariffs on imported beef didn’t bring down beef prices as we have seen new highs repeatedly as the retail industry takes advantage of the stable cutout price since highs were made in September and has constantly tested the waters on how high they can take prices before demand turns lower. Demand has continued to impress with the 1^st quarter show a 10-point leap in the demand index over last year. According to Circana, beef continued to impress in April even as prices continued higher. Volume was still up for fresh beef indicating, in my opinion continued consumer preference for beef over other meats even at high price levels. Futures traders however seem to focus on the rumor and not the reality, in my opinion. To me the increased record imports have shown the need for product to supply the consumer as our supply tightens and as our imports have surged so has cash prices. So, this time has been a little different as the consumer has made a difference and the packer has been forced to pay up for cattle as, so far, record imports have not negatively affected cattle prices. But has affected traders’ views of futures prices as talk of more imports pressure futures but the industry ignores the futures breakdown and goes about their business of buying/ selling cattle. In my opinion, the elimination of the importing of Mexican cattle has cut the supply of formula cattle which gave the packer control over the south’s price action to a point that it has forced the group to compete for cattle. This has led to an equalization of cash prices between the north and south instead of a 10-point difference like we saw multiple times last year. This has kept the north prices high as the feed time increases as the packer needs heavier cattle to meet production and quality needs. It is this increase in choice/ prime that has put the consumer in a love affair with beef as the increase in grading has placed beef in the (as I call it) preferred category instead of a commodity (as I call it) like chicken. The result is a willingness to pay more for beef than other proteins. And, protein is the flavor of the day as the consumer has jumped on the bandwagon in a big way, in my opinion. Cash prices are king and I am hearing that the packer has shown a desire to buy cattle at 265.00through the middle of June and they don’t look to pay a record price in the future if they think those records will hold and price go down. So, in my opinion futures prices are undervalued and should move higher towards cash. Cash prices set new all-time highs at 266. 00 on a live basis and at 415.00 on a dressed basis. Futures traders seem nervous however, at these price levels and seem to react badly to rumors or comments about beef supply. We’ll see!... August Feeder Cattle gap opened lower and made the low at 356.00. It reversed course and rallied to the high at 362.20. It drifted the rest of the session and settled near the high at 361.45. The lower open stalled well above support at 354.55 and the rally stalled just below resistance at 363.00 and just above the flattening 50-DMA. Settlement was right at the 50-DMA so in my opinion the price action on Monday will key of the settlement price. A failure from settlement can take price lower and test support at 354.55. Support then comes in at rising 200-DMA now at 353.075. A rally above the key level at 363.00 could see price test resistance at the declining 21-DMA  now at 365.025. The key level at 365.675 is next. August Live Cattle is now the lead contract on the continuous chart as its volume has surpassed the volume for June. It gap opened lower on the August chart and made its low at 245.525, which is right at support at the rising 8-DMA on the August chart now at 245.55 and just above support on the continuous chart at 245.125. Price rallied off support and raced to the high at 248.375 by 9:30 CDT. The market pulled back and then a late rally took price higher and it settled near the high at 247.925. The rally took price to the key level at 248.30 on the continuous chart and settlement was just below the key level. If price can overcome the Friday high, we could see a test of resistance at 249.95. Resistance then comes in at the declining 13-DMA now at 251.575. A failure from settlement could see price test support at 246.975 and then the Friday low.                                               

The Feeder Cattle Index released Friday increased and is at 374.83 as of 05/07/2026 settlement. 

Boxed beef cutouts were higher as choice cutouts increased 1.80 to 389.25 and select increased 0.25 to 389.25. The choice/ select spread widened and is at 0.00 and the load count was 103.

Friday’s estimated slaughter is 100,000, which is above last week’s 92,000 and below last year’s 103,603. Saturday slaughter is expected to be 9,000, which is below last week’s 13,000 and above last year’s 2,244. The estimated slaughter for the week (so far) is 535,000, which is above last week’s 527,000 and below last year’s 566,109.

The USDA report LM_Ct131 states: So far for Friday, negotiated cash trade has been limited on moderate demand in Nebraska and the Western Cornbelt. The last established market test in Nebraska was Thursday with live purchases at mostly 265.00 and dressed purchases at 415.00. The last established market test in the Western Cornbelt was with live purchases at mostly 265.00 on Thursday and dressed purchases at mostly 410.00 on Wednesday. Negotiated cash trade has been mostly inactive on light to moderate demand in the Southern Plains. The last established market test in the Texas Panhandle was Tuesday with live purchases at 260.00. The last established market test in Kansas was Thursday with live purchases at 265.00.

The USDA is indicating cash trades for live cattle from 257.00 – 266.00 and from 400.00 – 415.00 on a dressed basis (so far) for the week.

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Ben DiCostanzo

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Walsh Trading, Inc.

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