Grain Weakness, Cash Strength Ignite CME Cattle Rally

Key Moments

Cattle Futures Rebound on Grain Pullback and Cash Support

Chicago Mercantile Exchange (CME) live cattle and feeder cattle contracts advanced on Thursday, supported by a sharp retreat in grain prices and a firmer cash cattle market, according to Reuters.

Market participants noted that cattle futures had been under heavy selling pressure in recent weeks, leaving them oversold. This backdrop contributed to a wave of short covering that further propelled prices higher during the session.

CME October live cattle ended the day 4.125 cents higher at 214.30 cents per pound. October feeder cattle futures on the CME gained 6.725 cents to close at 321.10 cents per pound.

Equity Market Strength Adds to Bullish Tone

A strong performance on Wall Street added to the positive sentiment surrounding cattle. Equity markets advanced after investors scaled back expectations for additional interest rate increases. The shift followed comments from US Federal Reserve Governor Christopher Waller, who said he would support holding the Fed funds target rate steady if incoming data indicate that inflationary pressures are easing.

Bearish Fundamentals Temper Cattle Upside

Despite the rally, several negative factors limited further gains in cattle prices. Traders pointed to expectations for increased imports of ground beef and a reduction in the threat from screwworm in Texas and New Mexico as key headwinds.

US President Donald Trump said he will temporarily ease beef tariffs to help lower prices and said ground beef imports would sell 25% below current prices, a move that triggered widespread condemnation from the US cattle industry.

Tyson Foods Cuts Outlook Amid Beef Margin Squeeze

Tyson Foods on Thursday cut its annual profit forecast for a second time within a month as tight US cattle supplies, volatile prices and cautious consumer spending put further strain on its struggling beef business.

Meatpackers have been bleeding money in their beef units as high costs for scarce cattle have outpaced benefits from record-high beef prices. Tyson eliminated thousands of meatpacking workers this year through plant closures intended to improve results, but said its beef business faced additional pressures in the quarter that ends in September.

At the consumer level, elevated gasoline prices and weakening consumer sentiment have reinforced concerns that buyers could reduce purchases of higher-priced beef and shift toward cheaper proteins such as chicken.

USDA Beef and Pork Prices

The US Department of Agriculture (USDA) reported weaker boxed beef values on Thursday. Choice cuts were priced at $377.30 per hundredweight, a decrease of $1.48 from the previous day. Select boxed beef dropped $2.58 to $351 per hundredweight.

In the pork complex, the USDA said wholesale pork carcass values were $92.85 per hundredweight, down $2.77 from a day earlier.

Hog Futures Weaken on Lower Pork Carcass Values

Hog futures moved lower as the decline in wholesale pork prices weighed on the market. The most actively traded October lean hog contract at the CME settled 0.325 cent lower at 83.45 cents per pound.

The drop in pork carcass values, totaling $2.77 per hundredweight to $92.85, pressured sentiment and contributed to the modest pullback in October lean hog futures.