Call the Market

Since the last week of January, both the live cattle and feeder cattle contracts have struggled to find support in the futures complex. Whether that be because of the changing political situation in the United States, or normal weakness in beef demand during the month of February, or even the pressure in which money managed funds had on the complex, technical pressure was undeniably felt, and traders believed the only solution was to work the contracts lower.

But since last week, both the live cattle and feeder cattle complexes have been trading higher and the marketplace seems to be regaining its bullishness. Since just last Friday, the spot March feeder cattle complex has rallied $6.27, and the spot April contract has rallied $1.77.

The feeder cattle complex has undeniably been the leader in the market's recent direction change, but between recently conquering its 40-day moving average, and upon the continued support of buyers in the countryside, the feeder cattle complex has had all the support it could wish for. Not to mention, even though last week temperatures were brutally low, and parts of the North and Central Plains accumulated a lot of snow, seeing moisture hit the ground has relieved some pressure from cattlemen who know that concerns about drought are never far away.

Just as a reminder of how strong the feeder cattle market is in the countryside right now, I'd like to note that as of Feb. 25 afternoon, the CME feeder cattle closed at $279.44 -- just $2 shy of the all-time high scored late in January at $281.68. And earlier this week at Joplin Regional Stockyards in Carthage, Missouri, feeder steers and heifers traded anywhere from $8 to $25 higher than last week.

But while the feeder cattle complex boldly rallies, the live cattle complex has a few more facets to manage and is going to take some more convincing before it can trade in the same manner.

In order for the live cattle complex to fully commit to trading higher, I believe beef demand will need to improve, and it would be helpful if the cash cattle market could regain its footing as well. Unfortunately, feedlot managers only control so much of the cash cattle market's outcome, as they have to dance around packers every week. And, with packers facing red margins, they drastically cut throughput as a means of needing to rely less on the cash market, and as an attempt to help beef prices through February -- the toughest month for beef demand.

The spot April live cattle contract is still hovering between both its 40-day moving average and its 100-day moving average, but with a little support, the market will hopefully continue to inch higher and reconquer the 40-day threshold.

The market has seemed to confirm a bottom for the near-term, encouraging cattlemen as they hope for the market to continue to prosper through 2025. It's important to remember that even in bull markets, there will be lower closing days, and lower trending weeks and even potentially lower trending months. But the recent change in the market's direction is helping cattlemen's morale, also a critical factor of the market.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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