Cattle Markets Bounce Back after Weak Open

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The Cattle futures markets broke down at the open to their respective lows of the day with September Feeder Cattle taking out its August 14^th low at 328.075. October Live Cattle made its low at 216.15 which is just above its recent low and September Feeder Cattle made its low at 325.775. Both markets recovered as we saw some short-covering in front of Friday’s Cattle on Feed Report. The report comes out after the close and is expected to show on-feed at 102.5% of last year, placements at 93.5% and cattle marketed at 92.6%. The rally took October Cattle to 219.325 and September Feeders to 330.70. A pullback into the close saw Cattle settle at 218.00 and Feeders at 328.925. Futures have remained under pressure as traders try to determine how the Tyson shutdown in Joslin, Illinois will affect cattle producers. There have been reports that producers have had some trouble finding shackle space for their cattle. If anything, it will likely increase their transportation costs as they will have further to go to get their cattle slaughtered. This adds to their stress and another nail in the coffin for increasing the cattle supply in my opinion. The good news is there may not be any more negative news that can materially affect the cattle market. The border will re-open, the screwworm is here and we have seen plant closings. We’ve seen it all in my opinion and there isn’t much more they can do to cattle prices to bring down the cutout prices. Market forces should prevail and at some point, the focus could shift back to the lack of supply of cattle and the strong demand for beef. The question everyone should be asking in my opinion is how can we get the retail industry to lower beef prices in the grocery stores? They have brought record prices to the consumer nearly every month with cutouts still trading well below their all-time high price established last September(except for the spikes during the pandemic). We’ll see!... 

The Feeder Cattle Index decreased and is at 341.85 as of 08/19/2026 settlement. 

Boxed beef cutouts were lower as choice cutouts fell 5.05 to 389.93 and select dipped 0.43 to 363.74. The choice/ select spread narrowed and is at 26.19 and the load count was 110.

Friday’s estimated slaughter is 103,000, which is below last week’s 106,000 and last year’s 117,886. The estimated total for the week (so far) is 412,000, which is below last week’s 416,000 and last year’s 451,893.

The USDA report LM_Ct131 states: So far for Thursday, negotiated cash trade has been limited on moderate demand in Nebraska and the Western Cornbelt. In Nebraska, there have been a few live purchases at 226.00 and a few dressed purchases from 355.00-356.00, but not enough for an adequate market test. The last established market test in Nebraska was Wednesday with live purchases from 225.00-226.00, mostly 225.00, and dressed purchases from 355.00-360.00, mostly 355.00-356.00. In the Western Cornbelt, there were a few live purchases from 225.00-226.00 and a few dressed purchases at 355.00, but not enough for an adequate market test. The last established market test in the Western Cornbelt was Wednesday with live purchases from 225.00-226.00, mostly 225.00, and dressed purchases at mostly 355.00. Last weeks market in Kansas was at 228.00.

The USDA is indicating cash trades for live cattle from 223.00 – 227.00 and from 355.00 – 360.00 on a dressed basis (so far) for the week.

Trade Strategy:

February 2027 Live Cattle Options Conservative Strategy 

Sell the February 2027 Live Cattle 250/230 put spread at 17 cents.

• Premium collected: $6,800, less commissions and fees
• Maximum risk: $1,200, plus commissions and fees
• Margin requirement: $1,104
• Risk management: Consider limiting risk to 200 points ($800) plus commissions and fees
• Profit objective: Work a bid to buy back the spread at 7 cents
• Potential gain: Approximately $4,000, less commissions and fees

February 2027 Live Cattle Options Aggressive Strategy

Buy the February 2027 224 call and sell the February 2027 234/224 put spread.

• Net cost to enter: Even money, excluding commissions and fees
• Margin requirement: $2,884
• Risk management: Limit risk to 500 points ($2,000) from entry
• Market outlook: We believe February cattle have the potential to rally back into the mid-230s
• Profit objective: If the market reaches that target, consider offering the three-way option position at 800 points
• Potential gain: Approximately $3,200, less commissions and fees

**Call me for a free consultation for a marketing plan regarding your livestock needs.**

Ben DiCostanzo

Senior Livestock Analyst

Walsh Trading, Inc.

Direct: 312.957.4163

888.391.7894

Fax: 312.256.0109

bdicostanzo@walshtrading.com

www.walshtrading.com

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