The Cattle Conundrum

• US Live Cattle markets (boxed beef, cash, futures) are showing signs of having reached a Tipping Point, what could be considered a long-term bearish development. 

• On the other hand, the Feeder Cattle futures market has seen a  Rubber Band Disposition develop, what could be considered a bullish outlook this time around. 

• Behind it all we have a US administration determined to wreck US prices by the time mid-term elections roll around this coming fall. 

As Forrest Gump told us, “Shrimping is tough.” The same could be said for the US cattle/beef industry, particularly after it fell into the crosshairs of the US president late in 2025. Recall at the time he, and his regime, had lost popularity due to the high price of beef at the meat counter. The US president demanded the US cattle industry increase supplies immediately, something that was both economically and biologically unfeasible. That didn’t matter, though. Since the industry had stood up to his dictates, his actions regarding US cattle and beef have been designed to destroy the industry, similar to what he did to US soybeans with his trade war with China that began in January 2018. Given this, it is within reason to question much of what we hear and see particularly when it doesn’t match with what the market(s) is (are) showing us. 

Recently, I’ve been talking both sides – bearish and bullish – about cattle markets. There are a couple good reasons for this: First, there are two distinct markets, live cattle and feeder cattle, and second, what I see is what I see. I’m not making it up, though I am questioning my analytical eyesight. Let’s start with live cattle. 

The last couple years, I’ve questioned how long US consumer demand could continue to provide support given the meteoric rise in price beef prices. In early September 2025, USDA reported choice beef at $416, a new all-time high. Something to keep in mind at this point: USDA Secretary Rollins is nothing but a cheerleader for the US president, and the latter demanded from the former that BEEF PRICES MUST COME DOWN. Conveniently enough, those daily boxed beef prices reported by USDA did indeed start coming down. Immediately. The chain of events was supposed to be: 

• Boxed beef comes down
• Causing packers to lower cash bids
• Which would then lead to fund selling in futures, switching long-term uptrends down as well 

The cash index did break during the fall of 2025, slightly, moving from a September high of $242 to a November low of $215, before rallying again to a new all-time high of $260 this past May.

It was at this time when I started talking more about the US cattle/beef industry reaching a tipping point. And at face value it seems this is how it is playing out. As the US moves through mid-July, the midpoint of the summer season, reported cash (not by USDA) had fallen to between $237 and $238, moving below its price from a year ago, according to my friend in the cattle industry Kyle Bumsted. Meanwhile, the futures market has been free falling (cue the Tom Petty song), with last Friday’s lower close (LEQ26) the 15th consecutive settlement in the red.

Despite this, a couple things stand out to me: 

• Fundamentally the market remains bullish
  • Basis is still strong as the break in cash has not kept up with the selloff in futures
  • Futures spreads near or above previous 5-year high weekly closes.
• Funds continue to hold a net-long futures position
  • Though the latest reported figure of 69,705 contracts was the smallest net-long since early October 2024.

No, the pieces don’t seem to fit together, and when that happens, particularly given the current environment, there is a strong likelihood numbers are being manipulated behind the scenes for political reasons. (Keep in mind there is an important mid-term election this fall, something I’ll discuss in greater detail another time.)

As for feeder cattle, Kyle and I have been discussing what looked to be a building Rubber Band Disposition in the market. In other words, the two sides – noncommercial and commercial – were moving in opposite directions. Funds have been liquidating their net-long futures position, so much so the latest Commitments of Traders report showed a switch to a net-short of 977 contracts as of Tuesday, July 14. This was the first reported noncommercial net-short futures position since October 1, 2024. As for fundamentals, futures spreads are skyrocketing meaning nearby contracts (GFQ26) are running away from deferred issues by leaps and bounds. Historically this has shown us commercial traders are buying based on the idea supplies are not keeping up with demand. 

What about the cash market? Something Kyle tells me frequently is most people do not understand how the cash indexes are calculated. And with the wild volatility seen in feeder futures, the cash markets have been making big swings to and fro based on how many head moved to town and how many head dropped out of the index calculation. Kyle updates me nearly every day, and honestly, I don’t know how he keeps up with the numbers. Given the wide swings, I’ve set aside using cash feeder indexes as the market price component of the economic Law of Supply and Demand. Therefore, I’m left with futures spreads telling me commercial traders are buying while noncommercial interests are selling. Typically, when a Rubber Band Disposition develops, when the Rubber Band breaks the market moves toward its fundamentals. In the case of feeder cattle, particularly with noncommercial interests recently switching to a net-short futures position, the result could be a round of buying tied to short covering. 

I could go on for pages, but it would only muddy the waters more. The bottom line, as Winston Churchill once said of Russia, is the US cattle and beef industry is “a riddle wrapped in a mystery inside an enigma”. How will it end? It depends on if market forces – real supply and demand – are allowed to play out and change over time. On the other hand, if politics have replaced economics, then as the Ghost of Christmas Present said, “I see a vacant seat in the poor chimney corner…if these shadows remain unaltered by the future…”.