Call the Market

Since bottoming in late November, following dramatic price erosion thanks to bombarding headlines and mass liquidation from money-managed funds because of overwhelming volatility, the live cattle complex has enjoyed a consistent rally into February. But now that the market is trading at levels not far from the peak established last October, traders are looking to the cash cattle complex for direction.

More than anything, with significant resistance pressure looming, traders no longer feel comfortable advancing the contracts without unwavering fundamental support. The April live cattle contract peaked last October around $250, and as of Feb. 10, it closed the day at $237.42. So, there's still roughly $13 of upward potential for the market to capture before traders are faced with potentially raising the market above the resistance threshold at $250, but this resistance threshold carries even more weight as thus far it's been the market's peak for this cycle.

Thankfully, feedlot managers sit in a strong position heading into spring with market-ready supplies of fed cattle extremely thin, and with beef demand remaining incredibly strong. It's anyone's guess at this point what prices could do this spring when prime grilling season gets underway.

Last week, Southern live cattle traded anywhere from $240 to $245, but mostly at $242 to $245, which is $3 to $6 higher than the previous week's weighted average. Northern dressed cattle traded at mostly $378, which is $1 higher than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 62,602 head. Of that, 80% (50,107 head) were committed to the market's nearby delivery option, while the remaining 20% (12,495 head) were committed to the market's deferred delivery option.

It's anticipated that fed cash cattle prices will continue to scale higher throughout the spring, and that packers will need to maintain a steady and consistent procurement of fed cattle. Being too short bought for any given week could mean a wild advancement in the market as feedlot managers are keenly aware of packers' need for more cattle. As always, risk continues to loom not far away, and we know now more than ever before that external pressures can cause the market immense pain. But, thankfully, with supplies so thin of market-ready cattle, hopefully the market's fundamentals get to remain in the driver seat of the market's direction heading into the second quarter of 2026.

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

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