6/3/2025 Market Commentary

Live Cattle: Live Cattle futures posted new contract highs in the deferred contracts today, before reversing direction and finishing $3.00/cwt off of their highs. There was no glaring news that led to today’s reversal lower but it definitely felt like fund long liquidation. Boxed beef has been pretty quiet to start this week, as both choice and select have been mildly mixed both days. With the lighter slaughter totals that we continue to see, and the abnormally small slaughter last week, boxed beef should be more supported than the mixed-to-unchanged start it has seen this week. The feedlots will most certainly be asking higher money this week after last week’s record setting sales. Fat cattle in sale barns the beginning of this week are being called $10/cwt higher than a week ago in some instances, and are definitely posting new records for sales. Sometimes the sale barn markets are a reflection of the trade in the country from a week ago, but they are trading higher nonetheless. June Live Cattle options will expire on Friday and the delivery period for June futures will begin on Monday. With the current market and the cash well above the futures, there should be no deliveries against the June contract.

Feeder Cattle: The cash Feeder Cattle market that had become stagnant the past few weeks resumed its higher tone and pushed the futures market to near contract highs this morning. The CME Feeder Cattle index had shed nearly $7.00/cwt over the course of seven days but is now back within a dollar of all-time highs. It is no secret that the number of available feeder cattle is at an all-time low, combine that with the corn market that cannot push higher, and the result is that feedlots are paying record prices for all classes of feeder cattle. As of last Tuesday, the funds were long 33,258 contracts, which is less that 1,000 contracts from their all-time record position. The record cash market is keeping the managed money interested in the Feeder Cattle complex and they are pushing the futures higher.

Lean Hogs: The pork cutout continues to work higher and is pushing the futures higher as well. New contract highs were posted in the August, and further deferred contracts yesterday and again today, and many months finished near those highs today. Open interest continues to flood into the Lean Hog complex on huge daily volumes. The managed money were net buyers of nearly 3,000 contracts for the week ending May 27 and are now long over 95,000 contracts. They are now approaching the upper 25% of their historical levels. The main theme amongst the Lean Hog complex is tighter supplies of hogs going forward, especially later in 2025 and the beginning of 2026, and lighter than expected production currently. Production for the second quarter of 2025 was roughly 4% lower than a year ago and does not look to improve going forward. Friday, we mentioned the gap between the June futures and the current Lean Hog index being $7.20/cwt. That spread has narrowed to $4.32/ cwt at the close of trade today, and will need to be relatively even by the close of trade on next Friday.

Corn: Corn futures started the week with higher trade but ended the day lower on Monday and saw slight gains on Tuesday. The main theme with all the grain complexes, not just the corn, is that there is no threat to U.S. production at the current time. The managed money is currently short just over 100,000 corn contracts and has no reason to exit those positions or even build a long position. Weekly export inspections were great again this week, well above the estimated range and keeps the U.S. well above the pace needed to reach the USDA’s export goal. All eyes will be on the WASDE report on June 12 and if there are any revisions higher to the current export number and in turn, lowering the current carryout. The crop progress report that was released yesterday afternoon showed the U.S. corn crop at 93% planted which is right on the 5-year average. Condition of the U.S. corn crop was also improved 1% from the prior week. Bottom line is the weather looks favorable for the U.S. growing season and the 95.300 million expected corn acres.