Cattle Futures Navigate Back and Forth Volatility Amid Mixed Supply and Demand Signals

The cattle futures market experienced significant back and forth trading pressure throughout the week, with live cattle contracts declining across most expirations. The mixed sentiment reflects competing pressures from supply constraints, disease concerns, and rising export demand that are pulling the market in different directions simultaneously.

Price Pressure Reflects Weak Cash Trade and Softer Futures Demand

Live cattle futures declined sharply, with losses ranging from $1.10 to $1.50 across most contracts during the recent trading session. Despite the weakness, open interest increased by 820 contracts, suggesting traders remain engaged despite the downward price movement. The cash cattle market continues to show limited activity, with bids holding at $232, as the Fed Cattle Exchange online auction displayed bids from $232 to $233.50 on 1,510 head but failed to generate any sales, indicating reluctance from both buyers and sellers.

Feeder cattle futures experienced similar pressure, with declines of 72 cents to $1.10 across most positions, though the expiring January contract managed to gain $1.07. The CME Feeder Cattle Index rebounded to $366.69 on January 28, up $2.70, suggesting some technical support despite the broader downward momentum.

Export Sales Surge Counters Inventory and Health Concerns

Export activity provided the week’s most constructive data point, with beef sales reaching 16,893 MT during the reporting week—the largest volume since November. South Korea emerged as the primary buyer, purchasing 7,600 MT, while Japan acquired 4,900 MT. However, beef shipments lagged sales, totaling 12,574 MT with 3,800 MT destined for South Korea and 3,600 MT for Japan.

Complicating the supply outlook, the APHIS update reported four new screwworm cases in Tamaulipas and one additional case in San Luis Potosi, Mexico, raising total active cases in those regions to 13. This disease pressure continues to cloud the market’s longer-term supply expectations. Meanwhile, Census trade data revealed beef exports on a carcass basis reached 190.4 million lbs in November, marking the lowest level since 2009. Conversely, beef imports declined 1.2% year-over-year to 151,316 MT, suggesting tighter domestic supply conditions.

The upcoming USDA Cattle Inventory report is expected to show all cattle and calves down 0.3% from last year, though beef cows are anticipated to be up 0.4% and replacement heifers up 1.7% year-over-year. These structural shifts in the breeding herd reflect the back and forth adjustments producers have made in response to recent profitability pressures.

Wholesale Beef Prices Follow Lower Amid Slaughter Adjustments

Boxed beef wholesale prices declined in line with the broader market weakness, with Choice boxes dropping $2.08 to $367.66 and Select boxes falling $2.85 to $360.72. The Choice/Select spread widened to $6.94, reflecting differential demand pressures across quality tiers.

Federal cattle slaughter on the most recent reporting day was estimated at 112,000 head, bringing the weekly total to 436,000 head—11,000 head below the previous week and 47,143 head below the same week last year. This year-over-year decline in processing activity underscores the tightening domestic supply picture that continues to support prices during this period of back and forth market consolidation.

The futures complex closed with Feb 26 Live Cattle at $235.500 (down $1.325), Apr 26 Live Cattle at $237.275 (down $1.450), and Jun 26 Live Cattle at $233.275 (down $1.175), while Jan 26 Feeder Cattle finished at $369.175 (up $1.075), Mar 26 Feeder Cattle at $365.125 (down $0.725), and Apr 26 Feeder Cattle at $363.225 (down $1.075).