Cattle Futures Show Divergence as Traders Await Key USDA Inventory Report
Chicago Mercantile Exchange live cattle futures found footing from a firm cash market on Friday, with the front-month February contract leading gains. The market exhibited a mixed picture, however, as deferred live cattle contracts and all feeder cattle futures posted notable declines ahead of a key government report.
Cash trade for live animals was reported in a range of $238 to $240 per hundredweight across major feeding regions, with dressed beef prices between $375 and $378. The morning's Fed Cattle Exchange online auction saw limited sales of 719 head at $240-$241 live. This cash strength provided a lift for nearby futures, with February live cattle up $1.10 to $236.60 by midday. The April contract eked out a modest 7-cent gain to $237.35.
The feeder cattle complex told a different story, plummeting $3.95 to $4.35 as high feed costs and economic uncertainty weighed on outlook for younger animals. This drop came despite the CME Feeder Cattle Index rising $2.70 to $366.69 earlier in the week.
All eyes are now on the U.S. Department of Agriculture's annual Cattle Inventory report, slated for release later today. Analysts anticipate the report will show the total inventory of all cattle and calves dipped 0.3% from January 2023. Within that figure, the beef cow herd is projected to be up 0.4%, while heifers held for replacement—a signal of future herd expansion—are seen rising 1.7% year-over-year.
"The market is in a holding pattern, digesting the cash trade and waiting for the inventory numbers," said Michael Riggs, a veteran analyst with Heartland Commodities. "The modest expected decline in total numbers, coupled with an increase in replacement heifers, suggests producers are being cautiously optimistic about rebuilding, but the high cost of doing business is a major headwind."
In other market developments, wholesale boxed beef prices were mixed in Friday's morning report. The Choice/Select spread narrowed to $3.44, with Choice boxes down $1.22 to $366.44 and Select climbing $2.28 to $363.00. Slaughter levels provided a note of concern; Thursday's estimated federally inspected cattle kill of 112,000 head brought the weekly total to 436,000, down 11,000 from the previous week and nearly 50,000 head below the same week last year.
A health concern also lingers on the periphery. The Animal and Plant Health Inspection Service (APHIS) reported Thursday five new cases of New World screwworm in Mexican states bordering Texas—four in Tamaulipas and one in San Luis Potosi—bringing the active case total in those states to 13. While not an immediate threat to U.S. herds, the situation is being monitored closely by industry officials.
Market Reaction:
Feb '26 Live Cattle: $236.600, up $1.100
Apr '26 Live Cattle: $237.350, up $0.075
Jun '26 Live Cattle: $232.375, down $0.900
Mar '26 Feeder Cattle: $360.750, down $4.375
Apr '26 Feeder Cattle: $358.875, down $4.350
May '26 Feeder Cattle: $356.025, down $3.950
Sarah Chen, a portfolio manager specializing in agribusiness, offered a measured view: "The divergence between live and feeder cattle is classic market signaling. Strength in finished cattle suggests decent demand, but the plunge in feeders reflects real anxiety about input costs and future margins. The inventory report will be the next major catalyst."
A more critical perspective came from Jake Tolliver, a rancher and outspoken industry commentator. "This is a market on painkillers, not vitamins," Tolliver said sharply. "The cash trade is providing a short-term sugar high, but look at the slaughter numbers—demand is soft. And these feeder prices are a disaster for anyone trying to restock. The entire supply chain is squeezed, and Washington's reports just dress it up with percentages."
Finally, Dr. Elena Rodriguez, an agricultural economist at the Great Plains Institute, highlighted the broader context: "Beyond today's price moves, the industry is navigating a complex set of challenges: disease surveillance at the border, consumer price sensitivity for beef, and the long-term biological cycle of herd rebuilding. Today's data points are just snapshots in that larger, slower-moving story."
On the date of publication, the author did not have (either directly or indirectly) positions in any of the securities mentioned. All information and data is solely for informational purposes.