Call the Market

It's been exhilarating to watch the cattle complex over the last two trading days as it's been abundantly clear 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 last Friday's bullish Cattle on Feed report, or upon hearing USDA 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 both Monday and Tuesday of this week; 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 Tuesday's 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 innately 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 this 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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