7/1/2025 Market Commentary

Live Cattle: Live Cattle futures traded sharply lower the entire day today. The news of opening the Mexican border for feeder cattle imports affects the Feeder Cattle more than it does the Live Cattle in the near future, but the selling spilled into the Live Cattle complex as well. Cash has been quiet so far this week with limited trade. Packers in the South were bidding 220 and packers in the North were bidding 223 this morning with the lower board and the good basis compared to the August contract. No one was too excited about those bids and they were passed. Boxed beef continues to work higher and is enticing the packers to increase chain speed. Choice was up $0.25 this morning to $395.81 and select was up $0.92 to $385.02. Typically, boxed beef struggles to maintain value after the 4th of July holiday but with slower kills and tighter numbers of cattle, this year could be different. Demand has surprised almost everyone up to this point, but needs to stay constant to support the current boxed beef prices.

Feeder Cattle: The Mexican border will be reopened next week according to the USDA. A plan was announced yesterday that will allow ports to slowly become open to move Feeder Cattle north into the U.S. The Mexican border has been closed since May 11 and many were beginning to believe that it could remain closed for the remainder of 2025. One port will open next week, and four more ports will open over the course of the next few months. This will be a slow open and will not allow for the same amount of imports that were seen prior to the initial closing last November. Feeder Cattle futures saw the upcoming increased supply of Feeder Cattle within the U.S. as bearish news and traded sharply lower all day. More supply is coming, but this is not going to change overnight. Imports will be allowed through limited ports and there will be restrictions and procedures that will definitely slow down the process. August futures are now at a steep discount to the current CME Feeder Cattle index. There is plenty of time before those need to converge, but if demand for Feeder Cattle stays the same and supply does not change much, the index may not drop as much as the futures have priced in.

Lean Hogs: Following last week’s Hogs and Pigs Report, Lean Hogs have lost between $2-$4 across the remaining 2025 contract months. The cutout has backed off $8 from the high of $122.78 that was set on June 23. The managed money sector was record long the Lean Hog complex as of last Tuesday and with the large drop in the cutout, open interest has dropped 4,000 contracts. The drop in open interest would indicate long fund liquidation. Even with the drop in the cutout and the futures, cash remains strong. The national cash price jumped almost $4 to start the week compared to the average paid last Friday. Along with the cash staying strong, Friday’s National Direct Feeder Pig Report showed cash ISO weans $18 higher than a year ago and cash feeder pigs $35 higher than a year ago. This most likely represents the disease pressure producers have seen, creating empty finisher spaces they are needing to fill.

Corn: Corn futures found no support from the neutral to slightly friendly Planted Acres and Quarterly Stocks Reports that was released on Monday. Last week, we mentioned a neutral report could actually be bearish to the corn market. There were still plenty of traders that were holding onto hope that corn acres were overestimated in March, or that those acres did not get planted. Even with the slightly smaller corn acre number that was released on Monday, the managed money saw no reason to begin to exit their short position. The focus now will shift back to weather, and after the last 10 days, the majority of the Corn Belt is sitting with good moisture to get the crop to pollination. WASDE reports over the next few months will show current yield and production estimates and in turn, changes to carryout. Traders will also be watching South America and the huge crop they currently have.