3/14/2025 Market Commentary

Live Cattle: Cash trade had been quiet all week with limited bids and much higher asking prices. Light trade in the South took place on Friday morning at 202. Bids of 205 live and 322 dressed did buy a few cattle late this morning but for the most part, feedlots were asking more money and later in the day, cattle were trading at 206 and 325. Boxed beef was lower at mid-day but will finish the week higher in the choice cutout and steady in the select. The choice/select spread that had been hanging extremely tight has begun to widen out and showing signs of demand. Slaughter this week is showing signs of improvement. At 587,000 head this week, it is up 9,000 from last week. A regional packer in the North was back in the cash market this week after advertising they would only be killing 3 days a week and that would all be contract inventory. With the increase in boxed beef and the expectation for higher demand heading into the summer, packers are looking to fill boxes and coolers and need cattle to do that. Carcass weights were down 5 lbs compared to the week prior. This data is for the week ending March 1, which would be following the widespread cold snap across the Midwest. Surprisingly the cattle complex has been able to ignore the meltdown in the equity markets this week and focus on the cash fundamentals. April cattle finished this week $13.675 higher than the low posted last Tuesday. Open interest continues to climb to record levels as the managed money wants to own cattle futures as tight supplies persist.

Feeder Cattle: Feeder cattle futures pushed to new contract highs four of the five days this week and set all-time high price levels. Higher live cattle futures, lower corn, and high demand have all supported the feeder cattle complex. Open interest has moved to record large with the latest rally and the funds are also record long. Demand in the sale barns is extreme and has pushed the CME feeder cattle index to a record high of $282.72 which is also up $8.77 on the week. Mexican feeder cattle imports have been resumed, nothing like the volume that the industry saw before the discovery of the screwworm, but it would appear the flow is something close to 50% of what it would have been a year ago. The overall story for feeder cattle is the red hot cash market. Tight supplies of available feeder cattle and feedlots that have open pens have created a sharply higher cash market.

Lean Hogs: Lean hog futures saw a nice recovery over a 5-day period that ended at the beginning of this week. April futures ran into stiff chart resistance at $88.425 and pulled back nearly $2 to finish the week. The charts are now fighting the 20-day MA above the market. Traders are worried about the ongoing tariffs with Mexico and what that means for demand for U.S. pork. Shipments have slowed since the first of the year, which can’t fully be blamed on the proposed tariffs, but it definitely has an impact. Cash fundamentals were mixed this week with all of the cash indices dropping lower while the cutout saw a small gain. Slaughter picked back up this week after the weather delays we saw a week ago, and also well above the same week last year. Hogs and Pigs data will be released in 2 weeks and traders are eager to see what the status of the hog inventory is. Slaughter rates through the first few months of 2025 would indicate that overall market hogs are 1.5-2% higher than the last report indicated.

Corn: Corn futures finished the week lower after trading through the 38% retracement level at the beginning of the week. The monthly WASDE report provided no changes to the domestic balance sheet even with corn exports running more than 200 million bushels ahead of the seasonal pace needed to meet the USDA estimate. It’s possible the USDA sees the uncertainty and the unknown related to the tariffs, with Mexico in particular, and were willing to wait for a later date to make those changes. Export demand has been good, but there is a good percentage of bushels that have been sold to Mexico that are awaiting shipment. If the tariffs go into effect, the fear would be Mexico cancelling those purchases. Corn basis has firmed up across the country as farmer-selling has slowed down with the lower prices. Most end users have good ownership for a few months but as we get into summer, will need to be buying bushels.