1/31/2025 Market Commentary

Live Cattle: The cattle complex finished the week higher after 2 days of trading lower. After setting a new contract high on Tuesday, April futures quickly erased $5.775/cwt over the next 2 days. Cash trade in the north felt somewhat stagnant as packers tried to use the break in the futures to buy cattle at steady or lower money. The bulk of the trade in the north took place at $210, while the south traded at $208, $6 higher than the previous week. The choice cutout has now backed off $5 in the past couple of days. The market doesn’t act like it is waiting for the boxes to turn lower before giving up on this rally, but still something to keep an eye on. Today, the market was watching tariffs on Canada and Mexico that are set to go into effect tomorrow. Conflicting reports out of news agencies have been the top of the headlines today. Some saying that the Trump administration has pushed the tariff decision to March 1st, others saying tomorrow is still on schedule. We will have to wait to see what officially happens. Either way, tariffs on these 2 countries should be supportive of the beef complex. Cattle inventory report that was released at 2pm today showed total cattle inventory at 99.4%, beef cows at 99.5%, and the calf crop at 99.9%. All right around the average prediction with the exception of the calf crop which was 1.4% higher than the average guess.

Feeder Cattle: Feeder cattle futures also traded mixed this week, finishing the week sharply higher. New contract highs posted early Wednesday gave way to sharp losses. The feeder cattle index continues to trade steady higher, keeping the near-by months supported. Corn correcting lower late in the week also gave relief to the futures. Eyes remain on Mexico and the border with new tariffs set to go into affect this weekend that could further restrict the flow of feeder cattle into the United States. Going forward, available feeder cattle will remain tight.

Lean Hogs: Lean hog futures continue to show some strength with the cash remaining strong in months where we are usually working through a surplus. This time of year, spikes in the cash market are typically due to weather not availability. The pork cutout remains strong with bellies leading the charge, a complete reversal of what bellies were doing to the cutout a year ago at this time. We are still waiting to see what affect the tariffs on Canada and Mexico will have on our cutout. The United States exports approximately 25% of total pork production, and of that 25% we send 40% to Mexico. Mexico did state they would have reciprocal tariffs on U.S. pork if the U.S. follows through. The cash isowean market continues to remain strong, costing over double what they did last year at this time. This could be a result of more disease pressure and depopulation of sow units. With such a strong isowean price, we may see a shortage of market ready hogs come summer time.

Corn: Corn Futures posted a new high for the move on Wednesday before falling victim to tariff talks. Futures gapped lower on Thursday night and quickly found double digit losses throughout the complex. Export sales were good this week, recovering from poor sales throughout the holiday season. Mexico has become our biggest importer of corn as of late, and with tariffs on the horizon, the market questions what impact that has on our carryout. Corn carryout has decreased 26% since last summer, and if the U.S. loses a large buyer like Mexico, our carryout could increase moving forward.