Live cattle futures rally amidst market dynamics

Trey G. Freeman, Commodity Futures Broker/Livestock Agent, Ever.Ag

Open interest in live cattle futures climbed nearly 15,000 contracts last week, propelling the nearby August futures to a nine-month high. The contract settled $1 per hundredweight higher for the week, at $186.425. August remains at a discount to cash, with the 5-Area Fed Steer price hovering around $195 per hundredweight.

The Goldman roll begins this week, lasting through Friday. The roll will limit rallying potential in the August contract and provide support in October and December futures. Upon completion, August has a seasonal tendency to push higher through the remainder of the month.

Cash is expected to take on a softer tone into the end of the month as the trade looks for the beef complex to soften, lead lower by loins. However, boxed beef edged higher once again last week, with Choice averaging $329.96 per hundredweight, up $6.25 from the week prior. The rally, which started in mid-June, is bucking seasonal trends.

A retracement down to the $300-per-hundredweight level in choice beef is likely in the coming weeks. However, the beef complex should have a layer of support from the shortage in 90s lean grind supplies, due to a sharp drawdown in cow slaughter this year. For the first 25 weeks of the year, cow slaughter is down almost 15% compared to the same period last year.

August feeder cattle futures settled $2.175 per hundredweight higher for the week, at $261.475. Late summer and fall contracts have posted higher lows on a monthly chart for four months now. Sharply lower corn futures have provided support in feeders, while a sideways trade in February and April 2025 live cattle futures have stymied upward movement. August feeders face stern resistance at $265 per hundredweight. A close above this level opens the door to the high for the year posted in February at $272 per hundredweight.

The risk of loss trading commodity futures and options can be substantial. Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made. The information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.