Feeder Cattle Resilience as Live Cattle Momentum Fades Into Weakness

bridge_anxiety · 2025-12-31T15:43:58+00:00

The livestock futures market showed contrasting trends on Monday, with feeder cattle gaining strength while live cattle futures declined. Despite weak immediate demand for live cattle, producers remain optimistic about future feeding margins, reflected in feeder cattle's resilience and a notable rise in the CME's Feeder Cattle Index.

bridge_anxiety

2025-12-31 15:43:58

Abstract generation in progress

The livestock futures market displayed a tale of two narratives on Monday, with feeder cattle proving their strength even as live cattle contracts lost ground. Live cattle futures declined sharply, with December futures dropping 17 to 92 cents across contract months—a clear fade in momentum heading into Wednesday’s expiration.

Price Action and Market Split

Despite weakness in the live cattle complex, feeder cattle painted a different picture. January 2026 Feeder Cattle climbed $0.825 to $347.00, while March and April contracts gained $1.25 and $1.225 respectively, closing at $341.675 and $340.425. The CME’s Feeder Cattle Index recovered to $356.00 on December 26, posting a $6.68 gain that underscored the sector’s relative resilience.

The contrast highlighted divergent market sentiment: producers appear confident in future feeding margins, even as immediate live cattle demand softens. Cash trade for live cattle hovered around $229-230 last week, providing context for why spot prices remain stable despite the futures fade.

Beef Price Volatility and Slaughter Data

USDA Wholesale Boxed Beef prices showed mixed signals in Monday’s PM report. Choice boxes slipped $1.88 to $349.33, while Select beef actually strengthened, moving $1.82 higher to $345.62. The Choice/Select spread narrowed to $3.71, suggesting retail demand may be pulling back on premium cuts.

Federal cattle slaughter estimates came in at 118,000 head on Monday—3,000 head below the prior week and 4,091 head below year-ago levels. This softer kill pace, combined with the pricing dynamics, suggests the market is working to establish new equilibrium levels.

Forward Looking: The Feeder Play

What’s particularly noteworthy is how Feeder Cattle futures resisted the broader selloff, maintaining gains despite the live cattle fade. This strength suggests that producers see value in the current risk-reward setup for future placements, even with immediate weakness in spot markets. The $6.68 rally in the CME’s Feeder Cattle Index provides additional confirmation that the foundational leg of the cattle complex retains support.

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