Cattle Markets Breakdown and End the Week on a Sour Note

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The Cattle futures markets opened higher on Friday and traded to their respective highs. The markets then worked their way lower eventually reaching their lows for the day. A late rally gave hope we could close in positive territory but that was dashed at the close and the markets settled in the lower end of their ranges. The markets didn’t accomplish much with Friday’s price action with Feeders trading within Thursday’s range and fat cattle dipping below its Thursday low but bouncing off that decline. There wasn’t any major news in the market today unless you count a tweet from the White house that the President is “authorizing legal documents to be drawn in order to allow Farmers and Ranchers to be given the right to PROCESS THEIR OWN FOOD” as earth shattering news. Packers ended up paying their highest price for the week at one point on Friday as some live sales reached 222.00. Cutouts were weaker and they are expected to slaughter 542,000 head this week which is likely the highest slaughter of the summer and maybe for the year. Why? Because it looks like they are making bank at cash prices have collapse off their highs and cutout prices are in the high end of their range for the year, in my opinion. Cattle supply remains tight but the constant pressure forces outside of the producers’ control have taken price to the woodshed but has not pressured the beef price. This has the packer once again taking control of the price action in the cash market and keeping producers on their heels. The plant shutdowns, the border opening and of course the White House’s desire to control the price of beef has led to an exodus of bullish traders from the market. Of course, this has done nothing to affect the price of beef, so the packer is once again laughing on its way to the bank. We’ll see!... October Feeder Cattle made its high at 319.25. This fell short of resistance at 319.45 and price dropped. It made its way to the low at 315.15, stopping just shy of Thursday’s low at 314.90. It Kept trying to work higher but ended up settling closer to the low at 316.525.  A failure from settlement could see price test support at 314.20. Support then comes in at 311.90. If settlement holds, we could revisit the Friday high and its nearby resistance. Resistance then comes in at 321.00. October Cattle made its high at 214.00. It failed just below resistance at 214.325. The ensuing breakdown took price to its low at 210.825. This was just below Thursday’s low at 211.375 and support at 210.975. Price held its ground , tried to rally and the pullback into the close saw it settle at 211.725. If settlement holds price could revisit the Friday high. Resistance then comes in at 215.60. A failure from the low could see price test support at 208.80 and then 207.725.

The Feeder Cattle Index decreased and is at 332.80 as of 08/27/2026 settlement. 

Boxed beef cutouts were mixed as choice cutouts fell 5.13 to 376.23 and select increased 1.89 to 361.08. The choice/ select spread narrowed and is at 15.15 and the load count was 108.

Friday’s estimated slaughter is 103,000, which is above last week’s 99,000 and last year’s 99,350. Saturday slaughter is expected to be 24,000, which is above last week’s 15,000 and last year’s 1,808. The estimated total for the week (so far) is 542,000, which is above last week’s 523,000 and below last year’s 566,581.

The USDA report LM_Ct131 states: So far for Friday, negotiated cash trade has been light on light demand in Nebraska and the Western Cornbelt. Compared to Wednesday in Nebraska, live purchases have been 2.00 higher from 220.00- 222.00, mostly 222.00. The last established dressed market test in Nebraska was on Tuesday at 342.00-345.00, mostly 345.00. Compared to Wednesday in the Western Cornbelt, live purchases have been steady to 2.00 higher at 220.00. The last established dressed market test was from 342.00-345.00, mostly at 345.00 on Tuesday.

The USDA is indicating cash trades for live cattle from 216.00 – 222.00 and from 342.00 – 355.00 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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