Trey Freeman, Commodity Futures Broker/Livestock Agent, Ever.Ag 

The cash market for fed cattle continues to lead live cattle futures, with the most active August contract selling at a steep $10-per-hundredweight discount to last week’s 5-Area Average Steer Price of $192.55. June futures, set to expire next Friday, also remain at a discount, currently $6 per hundredweight under the 5-Area.

The continued lack of enthusiasm in live cattle futures could be attributed to stronger-than-expected beef production observed throughout 2024. Markets may also be concerned about softer-than-normal beef demand for the period from July 4 to Labor Day weekend, amid elevated retail prices.

Beef production is down only 1.5% year-to-date versus 2023, due largely to stubbornly high dressed cattle weights. Last week, dressed weights for steers were reported at 924 pounds, four pounds higher than the previous week, and 37 pounds above last year. Cheap feed prices have allowed cattle feeders to feed longer and capture better margins. Friday’s Cattle on Feed report is expected to show a record number of total cattle on feed of 120 days or more.

Last week, USDA reported the average price in May for all-fresh retail beef at $7.96 per pound, up from $7.50 a year ago. Average retail prices have increased from month-to-month in 15 of the last 18 months.

Choice beef cutout averaged $318.29 per hundredweight last week, compared to the all-time pricing for the same week last year at $339.93.

Feeder cattle futures have traded in a $16-per-hundredweight range over the last 60 days. Analysts are closely monitoring corn futures as the weather market plays a heavy role in corn and soybean price movement this time of year. The June Acreage report, set to be released next Friday, may be the catalyst to push feeder futures out of the rangebound trade. Early pre-report estimates for corn acres range between 87 and 93 million acres.

Pre-report estimates for Friday’s Cattle on Feed report:

On Feed as of June 1: 99%, with a range from 98.3% to 100%

Placed in May: 98.5%, with a range from 95% to 102.4%

Marketed in May: 100.5%, with a range from 99.3% to 102.3%

The risk of loss trading commodity futures and options can be substantial. Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources deemed to be reliable, however, no independent verification has been made. The information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.