Feeder Cattle Futures Hit Limit on Demand Uncertainty

Key Moments

Futures Drop on Memorial Day Demand Concerns

Feeder cattle contracts at the Chicago Mercantile Exchange (CME) finished Thursday at their downside trading limit as investors grew cautious about consumer demand heading into the US Memorial Day holiday, according to analysts cited by Reuters.

Market participants were also positioning ahead of a monthly report from the US Department of Agriculture (USDA) due on Friday, which they evaluated could show that more cattle were placed into feedlots in April compared with the same month a year earlier.

Tight Herds, High Prices, and Policy Signals

Strong consumer appetite has driven US beef prices to record levels this year, even as the US cattle herd has shrunk to its smallest size in 75 years. Years of drought that damaged grazing lands, combined with a US ban on imports of Mexican livestock designed to block the New World screwworm parasite, have contributed to the reduced inventories.

“On the demand side, we’re going into a three-day weekend with high prices on energy and beef,” leaving market players uncertain of how consumers would react to the costs of both at the start of the traditional US grilling season, said Don Roose, president of US Commodities.

He added that recent statements from the Trump administration about potential actions to ease beef shortages are also pressuring futures, with traders fearing growing supplies alongside diminishing demand.

Mexico aims to double beef exports to the United States next year, its main meat industry group said.

USDA Expectations and Drought Impact

A Reuters poll of analysts expects the USDA to report on Friday that placements into feedlots last month were up 3.4% from a year earlier. The same poll projects that the US had 1.6% more cattle in feedlots as of May 1 than a year earlier.

Analysts noted that a renewed bout of drought across the Plains has recently prompted producers to move more cattle into feedlots.

Price Moves Across Cattle and Hog Contracts

August live cattle futures declined 5.950 cents on Thursday to close at 239.350 cents per pound.

Most-active August feeder cattle futures ended the session at 356.525 cents per pound, down by the full 9.250-cent daily limit.

In the lean hog market, June futures slipped 2.150 cents to 95.125 cents per pound, setting new lows not seen since December.

Key Futures Settlements