9/2/2025 Market Commentary

Live Cattle: Live Cattle futures traded both sides of steady today and finished the day mixed. The focus continues to be on the cash market that has grown stagnant in the North while the South has seen higher money for many weeks in a row. The spread between the North and the South has narrowed significantly over the past six weeks and is now at just $3. Boxed beef has stalled out over the past few days. This morning choice was down $1.67 to $413.74, while select was $2.82 lower at $387.18. The choice/select spread has also widened back out over the course of the past week. Beef demand has continued to surprise everyone up to this point of the year. Seasonally, boxed beef will work lower throughout the month of September as grilling season winds down, before recovering during the month of October ahead of holiday demand. The cash cattle trade has been quiet so far this week. The feedlots will again be asking for something near 250, while the packers will be hoping for a steady to lower market. Last week’s kill was estimated at 565,000 head, the highest slaughter total since the beginning of July. The increased boxed beef prices have enticed the packers to crank the chain speed back up. With higher slaughter levels, the packers have likely chewed through some of their inventory and will need to buy more cattle this week than they have in the past eight weeks.

Feeder Cattle: Feeder Cattle futures traded in volatile fashion to start the week. The nearby contracts traded nearly 3.00/cwt higher this morning, turned around and traded nearly 3.00/cwt lower, but rebounded to finish nearly unchanged on the day. Computers and algorithms seem to be running the complex and are adding to the volatility. The cash Feeder Cattle markets continue to surge higher, while the deferred contracts continue to close the gap on the nearby months as there is no timetable for a reopening of the Mexican border. The CME Feeder Cattle index continues to move higher and is now quoted at $364.47, up $5.30 on the week. Open interest has dropped back below 90,000 contracts after the August contract expiration. This will most likely rebound back higher as there is a lot of buying interest in the deferred contracts as they continue to be at a discount to the front months. Friday’s CFTC report showed the managed money as sellers of 2,576 contracts, reducing their long position to 30,580.

Lean Hogs: Following an impressive rally of $4.000 in the nearby contracts, and $2.500-3.000 in the deferred contracts last week, Lean Hog futures posted small gains again today. The October contract is still 10.000/cwt below the index, but for the last two weeks the index has been trending downward as cash hogs have been under pressure. Exports continue to be 5% below the USDA estimates, but with the price of beef remaining at all-time highs, the pork cutout continues to be supported at retail counters. As of last Tuesday, the managed money sector is holding a net long position of 114,000 contracts which is up 8,000 for the week. Hog slaughter last week totaled just under 2.4 million head which is down 1.5% from the same week last year. With the reduction in slaughter numbers, the expectation is that the USDA will revise their Hog and Pigs Report downward from the June data that was published.

Corn: Corn futures began the overnight session lower before finding technical support midday and posted new highs for the move late in the day. December futures are now at the highest level in the last 45 days. The final Export Inspections Report for the 2024/2025 marketing year were released this morning. Exports for the year exceeded the USDA’s estimates by 3% or 77 million bushels. Mexico was the top buyer for the year followed by Japan. Looking back nearly a year ago, the fear of traders was that all of the early export business that was reported between election day and inauguration day was other countries front loading their needs ahead of tariffs going into place. There may have been some of that, but the export pace never backed off compared to last year and previous years average pace. Last Friday’s CFTC Report showed the managed money as buyers of nearly 34,000 contracts reducing their net short position to 110,686 contracts.