5/20/2025 Market Commentary

Live Cattle: Live Cattle futures spent the day trading both sides of steady and finished mixed. The deferred contracts continue to out perform the nearby contracts as optimism remains that supplies of cattle will continue to be tight for the foreseeable future.  Boxed beef was sharply higher this morning as choice was up $5.63 to $360.44 and select was up $1.01 to $345.12. The lighter kills have helped contribute to the higher boxed beef prices as less supply of meat is forcing the retailers to pay up for the product. The higher boxed beef market is helping to support the board as the worry has been whether the consumer can afford these prices and if the packer would be able to move the product. Friday’s CFTC report showed the funds long 135,000 contracts as of last Tuesday. That was up 2,250 contracts from the prior week, but also before the steep futures correction that was seen later in the week. Cash this week will most likely be later in the week. Last week, the Nebraska steer weighted average was $1.83 higher, with instances of lower trade and others of higher trade. The board being down last week enticed feedlots to sell at steady money and capture the large basis compared to average years. Last weeks basis of $16-18/cwt is the largest basis in the month of May since 2018. Friday afternoon, the USDA will release their monthly Cattle on Feed Report. Estimates are cattle on feed to be down 1.5%, placements down 2.9% and marketings down 3.2%.

Feeder Cattle: Feeder Cattle futures opened the day higher before trading over a dollar lower, then put in new highs for the day and finished mixed. The CME feeder cattle index has turned lower the past few days as the live cattle board is now $5+ off of its highs. The index after Monday’s sales was quoted 1.53 lower at 297.33. Open interest within the feeder cattle complex has stayed relatively flat over the last 30 days and the managed money is nearing their record long position again. As of the close of trading last Tuesday, the funds were holding a long position of over 32,000 contracts, while the record long was set earlier this year at 34,132 contracts. Chatter continues about the closure of the Mexican border. This Friday’s Cattle on Feed Report will shed some light on how many cattle were coming across into the southern feedyards. Cattle on feed in Texas was 6% below a year ago as of last month, and 2% below in Kansas.

Lean Hogs: The deferred contracts set new contract highs again today as the thought of tighter supplies going forward stays on all traders minds. The nearby contracts have not joined in on as much of the gains but are within $3-6 of contract highs. The pork cutout continues to be supported and is helping to stabilize the front months and the cash markets. June futures are now $8.56 higher than the CME Lean Hog Index which is much wider than normal. Friday’s cold storage report will be worth watching for the hog and pork markets. The butts, ribs, hams, bellies and loins have all been well supported as the cutout has worked higher the past few weeks.

Corn: Corn futures were supported on Tuesday by a higher wheat market and slight technical support. 78% of the national corn crop is now planted, up from 62% a week ago and 11% higher than a year ago at this time. Export inspections released yesterday showed another good week of corn shipments. With exports now nearly 200 million bushels ahead of the pace needed to meet the USDA goal, optimism is growing that export demand will be increased in the June WASDE report. As of last Tuesday, the managed money was short 85,000 contracts, which was the result of them selling nearly 99,000 on the week, going from net-long to net-short. With the lack of a threat to U.S. production at this point and no big demand changes coming into the market, the funds have decided to be short and make the market give a reason to work higher.