Cattle futures on the Chicago Mercantile Exchange (CME) saw a sharp rise on Thursday, driven by ongoing supply shortages as meatpackers struggled to secure enough inventory. Feeder cattle futures reached life-of-contract highs, while live cattle futures climbed to multi-month peaks.
March 2025 CME feeder cattle futures settled up 3.225 cents at 266.200 cents per pound, with all other contracts, excluding January, also reaching new lifetime highs. Meanwhile, February live cattle futures ended 2.000 cents higher at 193.600 cents per pound, marking the highest level for the contract since March 21.
Meatpackers Face Inventory Shortages
Beef packers are encountering significant difficulties in finding sufficient cattle to meet their production schedules for the upcoming week. Analyst Cassie Fish, author of the Beef newsletter, noted that the shortage has been worsening over the past two weeks, leaving packers struggling to secure enough animals.
“The last two weeks, they have failed to buy very many cattle, and they are in a dire situation,” Fish said. “The cattle feeder is an unwilling seller, and so they have all the leverage right now.”
Meatpackers are facing mounting financial pressures, with estimated losses of $22.45 per head on Thursday, a sharp contrast to Tuesday’s losses of $10.00 per head and last week’s $69.95 per head losses, according to HedgersEdge.com, a livestock marketing advisory service.
Beef Prices See Mixed Performance
Despite the tight cattle supply, beef prices showed mixed results. The USDA reported that choice cuts of boxed beef fell 74 cents to $323.48 per cwt on Thursday afternoon, after peaking at their highest level in nearly six months earlier in the week. Meanwhile, select cuts declined by 29 cents to $294.23 per cwt, still just below a two-month high.
Lean Hogs Struggle
In contrast, CME February lean hog futures settled down 0.150 cent at 81.150 cents per pound, reaching lows of 80.000 cents per pound for the second consecutive session, marking the lowest price since October 16. The CME lean hog index price for the two days ending December 30 was reported at $84.27, slightly lower than the December 27 figure of $84.35.
The USDA also reported a drop in the pork carcass cutout value on Thursday afternoon, which fell by 98 cents to $89.32 per cwt.
Conclusion
Cattle futures continue to surge amid ongoing inventory challenges faced by meatpackers, with strong demand pushing prices to new highs. While beef prices showed some volatility, the supply shortage has given cattle feeders significant leverage in the market. On the other hand, lean hog prices remain under pressure, struggling to recover from recent lows. The outlook for both markets will depend on how these supply and demand dynamics unfold in the coming weeks.
