Call the Market

It was exhilarating to watch the cattle complex last week, as it's been abundantly clear that traders all seem to recognize the same point, at the same time -- although cattle supplies may be tight now, they're only going to be tighter moving forward.

And upon seeing USDA's bullish Cattle on Feed report on Sept. 19, or upon hearing USDA announce it will "soon release a significant plan to help rebuild the American cattle supply, incentivizing our great ranchers, and driving a full-scale revitalization of the American beef industry. This is only the beginning, with many more announcements coming this week as USDA restores American strength, protects food security, and supports America's ranchers and farmers," the cattle complex has been hot-footing it to higher prices ever since.

The entire feeder cattle complex closed higher on Sept. 22 and 23, but what's most interesting about the market's behavior is seeing where traders are putting the most emphasis on the need for the contracts to scale higher. Without a shadow of a doubt, that's been seen most in the deferred feeder cattle contracts. For instance, at the Sept. 23 close, the spot November 2025 feeder cattle contract closed $0.85 higher at $360.75, but the August 2026 feeder cattle contract closed $3.60 higher at $345.07.

So, what's been the change or realization? More than anything, as the calendar year moves closer and closer to December and market participants realize 2026 is only three short months away, it appears traders are beginning to look past the market's immediate reality and are beginning to mull over the factors that will likely most affect the market in the months to come. Some of those factors include:

-- The likelihood Mexican cattle imports aren't going to open before the year's end and potentially will remain closed for even longer until the threat of New World screwworm (NWS) is no longer a burning concern.

-- The realization that when producers do elect to start keeping some heifer calves back for herd retention, on-feed supplies are going to grow inherently thinner.

-- The sheer realization that although prices are high in historical terms, looking back three weeks, three months, or even six months ago, the cattle that sold at those times seemed "too high." Now, looking back, they appear to be a good buy, as the market has mostly continued to edge higher.

There will always be ebbs and flows throughout the market; even bull markets trade lower. But last week, traders seemed to collectively agree that, from a fundamental perspective, there's only one direction the market can go -- and that's higher.

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

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