Key Moments
- Live cattle and feeder cattle futures on the CME advanced after cash prices climbed on extremely tight U.S. supplies described as a 75-year low.
- Cash cattle prices in northern regions such as Nebraska reached $265 per cwt this week, up as much as $7 from the prior week, according to traders.
- Meatpackers and pork processors were estimated to be losing $314.65 per head on cattle and about 95 cents per head on hogs as margins turned negative.
Futures Rebound as Cash Market Outpaces Board
Live cattle and feeder cattle contracts on the Chicago Mercantile Exchange (CME) moved higher on Friday, with traders pointing to a sharp rise in cash cattle prices this week driven by very limited U.S. supplies, according to Reuters.
Market participants said futures had fallen out of line with the cash market, which strengthened as meatpackers bid aggressively for cattle in an environment where inventories have dropped to what traders described as a 75-year low.
Supply Pressure From Drought and Import Restrictions
Traders attributed the contraction in the U.S. cattle herd to a prolonged drought that damaged grazing areas in the western United States and increased feed costs for livestock. At the same time, the Trump administration halted imports of Mexican cattle in an effort to prevent the New World screwworm parasite from entering the country, further tightening available supplies.
CME Prices and Cash Market Dynamics
In the cash market, traders reported that prices in northern regions such as Nebraska reached $265 per hundredweight this week, an increase of as much as $7 from the previous week.
Against that backdrop, CME cattle futures strengthened:
| Contract | Move | Settlement | Unit |
|---|---|---|---|
| June live cattle | +1.825 cents | 253.900 cents | per pound |
| August live cattle | +1.775 cents | 247.925 cents | per pound |
| August feeder cattle | +3.450 cents | 361.450 cents | per pound |
“There’s a pretty good discount or basis spread between futures and cash right now,” said Austin Schroeder, analyst for Brugler Marketing & Management. “You’re seeing the futures gain a little bit of strength here.”
Consumer Demand and Policy Considerations
Traders said robust consumer appetite for steaks and hamburgers in the United States has underpinned cattle and beef prices, which set records this year. In response to elevated domestic prices, U.S. President Donald Trump was reported to be weighing executive actions aimed at easing the way for increased beef imports in an attempt to temper the market.
China Renews U.S. Beef Plant Registrations
On the export front, Beijing renewed expired export licenses for more than 400 U.S. beef plants, according to information on China’s customs website, following a summit between Trump and Chinese President Xi Jinping. Analysts cited in the article said they did not expect the renewed licenses to trigger a significant jump in U.S. beef exports, given the tight availability of cattle and high prices.
“Renewal of US beef export facility registrations is an essential step to securing market access,” said Justin Tupper, president of the United States Cattlemen’s Association.
Margins Under Pressure for Packers and Hog Processors
The constrained cattle supply base has increased procurement costs for beef packers. Estimates from HedgersEdge.com indicated that meatpackers were losing about $314.65 on each head of cattle processed. For hogs, pork processors were estimated to be losing about 95 cents per animal.
Lean hog futures moved lower, with CME June lean hogs easing 0.775 cent to 98.750 cents per pound.
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