Sort & Cull

The live cattle complex had a tremendous performance last week as the market completely changed its demeanor and trajectory upon noticing the shift in the market's fundamentals.

To recap, on March 3 the spot April live cattle contract closed at $192.25 -- carving out a new support plane for the market. A week later, on March 10, the market closed at $200.57, rallying an impressive $8.32 in a matter of only five trading days. The market's rally pushed the spot April contract back above its 40-day moving average, which just a week ago seemed like a threshold that would surely be out of reach for the unforeseeable future. But also, with a little support from the market's fundamentals, traders fully supported the complex.

The market's fundamental support came in two main waves throughout the week as boxed beef prices showed slight improvement. Then, later in the week, cash cattle prices ventured to trade higher. Throughout all of last week's trade, choice cuts averaged $314.07 (up $1.28 from the previous week) and select cuts averaged $303.65 (up $0.55 from the previous week). Last week, Southern live cattle were marked anywhere from $196 to $198, which is $1 lower to $1 higher compared to the previous week. Northern dressed cattle sold for mostly $315, which is $2 higher than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 74,437 head. Of that, 91% (67,915 head) were committed to the nearby delivery, while the remaining 9% (6,522 head) were committed to the deferred delivery option).

Highlighting both positive fundamental developments is crucial as they're mechanically tied together. Packers have been battling red margins, paying more money for cattle than in previous year, and have been trying to patiently wait for seasonal beef demand to improve. So, if packers believe the market has finally rounded the corner in terms of beef demand, and that consumers are going to be actively seeking more beef as grilling season approaches, then the fed cash cattle market stands a chance to trade higher.

Technical instability amid money-managed funds, tariff turbulence and slow chain speeds remain some of the biggest hurdles that the market could face in the weeks ahead. But if the two main supportive factors listed above (beef demand and fed cash cattle prices) remain consistent and well supported, then there's a good chance that the market could be inching towards a second quarter rally for 2025.

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

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