3/25/2025 Market Commentary

Live Cattle: Friday’s Cattle on Feed report offered a spark to the futures market to start the week, but the market quickly sold off Monday, and the selling spilled into Tuesday. June futures posted a low today $7.700 below the contract high set on Friday before recovering and finishing the day fractionally higher. The managed money appears to be in control of the live cattle complex. With an ugly chart picture, price seasonality, end of the first quarter next week and the length they currently have in the market, it seems like funds are exiting positions.  Boxed Beef was quoted higher this morning with choice $6.93 higher and select $0.11 higher. The choice/select spread has widened back out to $20.34, showing signs of demand coming back to the beef markets ahead of grilling season. Digging into Friday’s Cattle on Feed report, Texas placements for February were down 27%, or 95,000 head. The closure and restriction of the southern border for feeder cattle imports continue to strain the supply of available cattle for the feed yards in the south. Cattle on feed in Texas and Kansas is 260,000 head less than a year ago, while Nebraska and Iowa have 50,000 head more on feed than a year ago.

Feeder Cattle: Feeder cattle futures have not been immune to the volatility within the cattle complex and are now seeing $5 daily ranges as “normal.” Cash feeder cattle continue to sell at record prices, keeping the CME feeder cattle index supported. The funds were record long as of last Tuesday, and open interest remains at all-time highs. August futures posted an all-time high of 294.775 last Friday and, at the low today, had erased $10 in two days. It’s not new that the industry is seeing record low inventory of cattle and tight feeder cattle supplies, but the question is whether live cattle futures will continue to support these cash feeder cattle prices and what summer weather will do to entice heifer retention and a herd rebuild going forward.

Lean Hogs: Cash fundamentals continue to be stagnant as the futures market continues to be volatile. Managed money has cut their long position in half over the last month and has no reason to begin to build that position back ahead of the Hogs and Pigs Report later this week and the end of the quarter next week. The futures market continues to fight the 20-day MA above the market but is now being supported by the 200-day MA. This afternoon’s cold storage report showed bellies down 23.8% compared to a year ago and 18% below the 5-year average. Total pork is down 6.7% compared to a year ago. Thursday’s Hogs and Pigs Report looks to be mildly bearish, according to pre-report estimates. As of March 1, all hogs are expected to be up 1.2%, hogs retained for breeding up slightly compared to a year ago and the December through February pig crop looks to be 1.8% more than a year ago.

Corn: Traders continue to buy time as they wait for the Quarterly Stocks and Prospective Planting report on Monday. Managed money has depleted a large portion of their long position and are looking for friendly news to build that long position back. Corn exports are 230 million bushels ahead of pace to meet the current U.S. export goal. The USDA will likely increase export demand on their balance sheets in April, depending on how tariff talks proceed. Farmer selling has been slow, and as a result, basis has firmed up in the Midwest. With lower prices and sales being made during the rally at the beginning of the year, the remaining bushels are being held tight. Most farmers are likely hoping for a summer weather rally or basis appreciation.