Livestock Futures Surge Ahead of Critical Cattle Feed Inventory Report

The cattle futures market is experiencing significant upward momentum on Friday, with live cattle contracts climbing $2.17 to $2.70 per hundredweight. The rally is being fueled by anticipation of the December Cattle on Feed report, set to be released later today, which will provide crucial insights into industry feed placements and marketing trends.

Cash Market Activity and Price Discovery

Thursday’s cash trade initiated with modest volume, recording select sales at $228 across multiple regions, alongside higher tier transactions at $356-358. The Fed Cattle Exchange online platform on Friday reflected the cautious sentiment, with 1,708 head listed but no confirmed sales executed. Bids settled in the $227-228 range, suggesting buyers are awaiting clearer direction from today’s cattle feed inventory data before committing to larger positions.

Feeder Cattle Strength and Index Performance

Feeder cattle futures are participating in the broader strength, posting gains between $5.10 and $6.10. The CME feeder cattle index recorded a 26-cent advance on December 17, reaching $350.05, signaling sustained interest in younger cattle suitable for finishing operations. This upward trajectory reflects underlying confidence in the livestock feeding pipeline.

Market Expectations for Cattle Feed Placements

Today’s Cattle on Feed report carries significant weight for traders. Market participants are forecasting that November cattle feed placements will decline 8% year-over-year, while marketings are expected to drop 11.3%. The December 1 on-feed inventory is anticipated to be 1.6% lower than last year’s comparable date. These projected declines could further tighten supply dynamics in the cattle feeding complex.

Wholesale Beef Price Dynamics

USDA wholesale boxed beef prices showed mixed action Friday morning. Choice beef prices advanced $3.61 to $360.89 per cwt, while Select grades retreated $3.57 to $347.54. The Choice-Select spread widened to $13.35, reflecting differentiated demand across quality tiers. This divergence highlights the nuanced nature of current beef market conditions.

Slaughter Volume Tracking

USDA federally inspected cattle slaughter reached 123,000 head on Thursday. Weekly totals stood at 472,000 head, representing a 12,000-head decline from the prior week and 11,643 head below the corresponding week last year. This year-over-year contraction aligns with earlier cattle feed placement concerns and supports the bullish tone in futures markets.

Current Contract Valuations

Live cattle futures are trading at elevated levels: Dec 25 contracts at $230.675 (+$2.250), Feb 26 at $231.075 (+$2.675), and Apr 26 at $230.325 (+$2.175). Feeder cattle contracts similarly reflect strength, with Jan 26 at $346.375 (+$6.100), Mar 26 at $340.100 (+$5.500), and Apr 26 at $338.275 (+$5.100). These gains underscore market confidence in tightening livestock feed supplies heading into the new year.