1/6/2026 Market Commentary

Live Cattle: Live Cattle futures have been drug higher by the Feeder Cattle market the past three trading days and are now at a large premium to the cash market. Last week’s cash averages were from 231 to 232 across all regions, while the nearby February contract has spent the last three days gravitating toward the 236.000 area. After nearly two years of record basis levels in the North, basis has flipped negative for most of the last three months and has caused the feedlots to feed cattle longer. The industry saw this take place at the beginning of October and before long, heavy cattle topped headlines. Throughout the months of October and November, the cash price continued to fall as there were plenty of big cattle that were fighting both flat cash price and disappointing basis levels. As the cash price turned higher during December, those cattle began to be cleaned up. For the past four weeks, the cash market has been stagnant along with basis levels that are not real attractive. Many cattle have been on showlists for multiple weeks and the industry is again drifting away from being current. Boxed beef started the week higher but both choice and select were lower this morning. Choice is currently quoted at $353.19 while select is at $350.81 with a choice/select spread of $2.38. The choice/select spread remains at the lowest levels in recent history as the primal cuts are under pressure. The cash market has been quiet up to this point of the week but feedlots will begin by asking for an even basis at the very least.

Feeder Cattle: Feeder Cattle futures continued their climb higher today, posting new highs for the move as the CME Feeder Cattle index continues to move sharply higher. Today’s release of the index was $9.06 higher at $362.17 following Monday’s sales. Large runs of Feeder Cattle with the start of the new year, along with continued optimism from buyers, have pushed cash Feeder Cattle back to record levels on some classes of cattle. Feed prices remain cheap and feedlots have increased their bids to fill their yards. As of last Tuesday, the managed money was long 15,295 contracts which was an increase of 666 contracts on the week. The all-time record long position is 37,806 contracts and was set last fall. Open interest continues to increase at a somewhat slow rate. Currently, total open interest in the Feeder Cattle complex is at 71,394 contracts and has recovered nearly 10,000 contracts since the beginning of December. New buying interest from the managed money as the cash fundamentals pushed higher has increased participation within the market. The Feeder Cattle complex has separated itself from the Live Cattle complex and has become the leader of price action since the start of the new year.

Lean Hogs: Lean Hog futures finished the day mixed after posting new contract highs in the deferred contracts yesterday. Continued strength in the summer months stemming from supply concerns tied to disease pressure has kept a premium built into the deferred contracts. The cash markets posted a new low yesterday as the national cash market is now reported at $66.36 after a week of limited information surrounding the holidays. The pork cutout continues to trade sideways but did move to the lowest level since before Christmas yesterday afternoon. Yesterday’s push higher in the futures came on a day of large volume of 73,000 contracts and an increase of 5,225 contracts of open interest. The managed money has been adding to its length over the past few weeks and yesterday looked like a continuation of that fund buying. The nearby February contract is currently at a $4.05 premium to the Lean Hog index with about five weeks to go until expiration. The futures have priced in an increase in the cash market in the near future. If the national average and the pork cutout do not respond in a positive way in the next couple weeks, the February contract will have to move lower to align with the cash fundamentals.

Corn: Corn futures could not hold the follow-through from Monday and finished the day slightly lower. Corn started the night session and most of the day session higher today before falling lower at the end of the day. Yesterday, the futures found support at Friday’s low and quickly returned back to the middle of the range, taking out the 100-day MA, 50-day MA, and the 20-day MA. Today’s settlement in the March contract was above the 20-day MA but all other months fell and stayed below that level. Weekly export sales were released yesterday and showed a slow week surrounding the holidays after more than ten weeks in a row of impressive sales. The USDA will release their January WASDE report next Monday and it is expected to see production lowered for the U.S. in 2025. This report has been looked at as the “final” production number for the previous year, but the past three years the USDA has adjusted that number in their Quarterly Stocks Report in September.