US Feeder and Live Cattle Market Analysis – March 26, 2024

Market in Flux: Feeder Cattle Hold High, Live Cattle Wait and See

The US cattle market continues to navigate a complex situation as drought concerns and their long-term impact remain unresolved. 

Feeder Cattle:

• Prices: Nearby feeder cattle futures contracts (like April expiry) are likely trading at a premium again today. News outlets haven’t reported on today’s official closing prices yet, but based on past trends, expect prices to be $195 – $205 per hundredweight (cwt) due to ongoing drought-induced culling. This is slightly lower than the hypothetical prices we discussed on March 22nd, potentially reflecting some market adjustments as the initial wave of culled cattle enters feedlots.
• Market Sentiment: The feeder cattle market might still be experiencing some volatility. While short-term concerns about feeder cattle oversupply linger, the potential for long-term tightening of supplies if the drought persists could provide some underlying support for prices.
• Cash Cattle Sales: Watch for reports on today’s cash cattle sales. If slaughterhouses actively buy feeder cattle at prices exceeding $190 per cwt, it could indicate continued strong demand despite the slight decline in futures prices. Conversely, cash sales data showing prices below $190 per cwt could suggest weakening feeder demand.

Live Cattle:

• Prices: Live cattle futures remain susceptible to mixed signals. Nearby contracts (April expiry) might see some buying interest in anticipation of tighter live cattle supplies later in the year due to drought. However, further out contracts (like July expiry) could still face selling pressure. Today’s closing price for July expiry contracts might be around $178 – $182 per cwt, reflecting some potential downward adjustment as the initial surge in feeder cattle supply will soon translate to more slaughter-ready cattle.
• Market Sentiment: The live cattle market is likely still in a wait-and-see mode, with uncertainty surrounding the long-term impact of the drought on live cattle supplies. The feeder cattle market’s performance today will influence sentiment towards live cattle prices. If feeder cattle prices remain elevated due to strong demand, it could bolster expectations of tighter live cattle supplies later, pushing live cattle futures prices higher. Conversely, a stable or declining feeder cattle market could suggest continued short-term pressure on live cattle prices.
• Cash Cattle Sales: Like feeder cattle, today’s cash cattle sales data is a crucial indicator. Higher cash sales prices could signal strengthening live cattle futures prices in the near future, while lower prices could suggest weakening demand for slaughter-ready cattle.

Overall Market Considerations:

• Weather Updates: Significant changes in weather forecasts, particularly regarding the drought situation, could significantly impact cattle market sentiment. News reports on any developments related to the drought could influence market movements.
• Consumer Spending: While not a significant factor today, keep an eye on consumer spending data related to beef. If recent data shows continued weakness in beef demand due to inflation, it could put downward pressure on live cattle prices in the long run.