Call the Market

If you look at the spot August feeder cattle contract and the spot June live cattle contract, the two charts nearly mirror each other over the last two months. In recent weeks, the feeder cattle contracts haven't dared trade higher without the support of the live cattle complex. But as the calendar gets closer and closer to turnout season, the feeder cattle market may grow a bit more independent as it's seeing nearly unfathomable demand.

Just last week -- mind you the holiday-shortened week for Easter -- the USDA National Weekly Feeder and Stocker Cattle Summary shared the nation's steers and heifers sold anywhere from $5 to $10 higher, with instances up to $13 higher in the South. But there were special highlights where prices were even higher as Russell Livestock Auction in Russell, Iowa, reported Tuesday afternoon (4/22/2025) steers were trading $6 to $33 higher and heifers were trading anywhere from $12 higher to even sharply higher. And while we are on the topic of heifers, I think it's especially interesting to note that heifer demand has been higher in recent sales as some buyers are hoping to buy heifers before breeding season, with the sole intention of trading them later this fall as bred females as they hope to capitalize on the high market.

Although it's fun to highlight the incredible demand in the countryside right now for feeder cattle, you and I both know that the market isn't free and clear from any risk, especially from a technical standpoint. The spot August contract reached a new contract high during the first week in April at $293.70 and Tuesday afternoon (4/22/2025) the market closed just $2.45 away from that threshold at $291.25. Which points to the unanswered question at this point: How are traders going to manage the market's resistance?

Unfortunately, there are plenty of landmines for traders to tiptoe around: any sort of trade/tariff news; fluctuations in boxed beef prices; the support/or lack thereof from the live cattle complex -- the list goes on and on. And while the market always has to balance its technical and fundamental factors -- I think there will be a time here in the immediate future where feeder cattle buyers have no choice but to fill their orders or sit the year out, which could give the feeder cattle complex enough fundamental support to silence some of the technical concerns. Maybe the feeder cattle complex will still trade in sync with the live cattle contracts, but I don't think whatever the feeder cattle contracts decide to do amid knocking on the door of technical resistance will lessen the rally currently taking place in the countryside. Feeder cattle buyers know turnout season is quickly approaching and it's hard to sell cattle next fall if you don't have them bought this spring.

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

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