Cattle Bulls Are Back in Business as Futures Prices Rise

October live cattle (LEV26) futures last week gained $6.725 from the week prior and on Monday morning were showing follow-through buying strength from Friday’s solid gains, including hitting a four-week high. November feeder cattle (GFX26) futures gained $5.40 last week and were also posting gains Monday morning, notching a five-week high.

Technical buying has been featured recently, as the near-term chart postures for both live cattle and feeder cattle futures have become more bullish. Both markets are in fledgling price uptrends on the daily bar charts.

Cattle futures prices are gaining despite a recent dip in cash cattle prices. The USDA at midday Friday reported still-very-light cattle trading for the week, with steers and heifers averaging $218.00. The agency last Monday reported average cash cattle trading the week prior at $219.06. However, cash cattle prices appear to be stabilizing from the recent declines. 

Tight supplies and lower cattle slaughter levels are likely to underpin cash and futures prices in the coming weeks, with 2026 beef output seen down about 4%. However, feedlot inventories are running above a year ago, carcasses are heavier, and extra lean-beef import quotas plus Mexico cattle shipments could limit gains in cash and futures. Continued cash stabilization and mixed boxed beef must firm for the rebound to last.

The stock and financial markets have become a bit wobbly over the past couple weeks. September and October are historically the two most turbulent months of the year for stock and financial markets. Any bigger wobbles in the stock, financial, or currency markets could dent consumer confidence, which may produce less demand for beef at the meat counter. Last week’s U.S. inflation readings that are still running warm suggest the Federal Reserve will raise U.S. interest rates by a quarter-point this week. That’s not a good development for better consumer confidence at the meat counter. 

Lean Hog Futures Prices Careen Lower

October lean hog (HEV26) futures last Friday fell $1.625 to $81.525 and for the week were down 77 1/2 cents. Price action Monday morning showed solid follow-through selling pressure and prices are back near their summertime lows.

The hog futures market has seen weak long liquidation from the short-term speculators over the past couple of sessions. The near-term technical posture for hogs looked more promising as of mid-week last week — and then the bottom dropped out of prices.

The latest CME lean hog index is down 28 cents to $87.94. The national direct five-day rolling average cash hog price quote for Friday was $87.72. Cash hogs and the CME lean hog index remain firmer than futures prices, which suggests futures traders are not bullish about the hog and pork markets heading into autumn. However, lighter hog weights hint supplies are tightening after packers pulled animals forward. Still, slaughter levels remain large. Lasting strength needs smaller kills and steady strength in cutout, not just one-day belly spikes.

Bullish hog traders can argue that historically elevated retail beef prices mean better substitution demand for pork, especially with retail gasoline prices rising above $4.00 a gallon and the Federal Reserve poised to raise U.S. interest rates this week, both of which could sap consumer confidence and prompt better demand for more economical pork cuts at the meat counter.

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On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.