Record cattle futures driven by cash market momentum

Futures were sharply higher Wednesday with triple-digit gains across the board in live and feeder cattle futures. Wednesday’s close in February live cattle of $200.05 per hundredweight is a new contract high, taking out the high from September 2023. It is also a new record high for a spot month contract. The same goes for January feeder cattle, settling at a record price for a spot contract of $277.05 per hundredweight.

The explosion higher points to large fund buying although there does not seem to be any development on the cash front warranting such an aggressive addition of longs. This suggests Wednesday’s move is a basis correction as the cash market has observed a hefty premium to futures for quite some time now.

Through Wednesday afternoon, we see fed cash cattle on the negotiated market trading mostly steady in the South at $201 per hundredweight, and some later this afternoon at $202 on small volume, $1 higher than the previous week. In the North last week, cash traded at $203 to $205 per hundredweight and $322 dressed with not enough movement this week yet to establish a market. Last week’s 5-Area Weekly Steer price notched another record high at $203.67 per hundredweight. This marks nine consecutive weeks of higher cash prices paid by that measure.

Dressed weights reported Thursday last week showed steers up 3 pounds to 959 pounds and heifers up 10 pounds to 878 pounds – a new record for heifers.

Choice boxed beef averaged $331.58 per hundredweight last week, an increase of $4.48 per hundredweight from the week prior. Select averaged $318.71 per hundredweight, an increase of $11.08.

The chuck and the round continue to storm higher while the rib primal continues its descent. The switch in domestic demand from middles to ends is in line with seasonal patterns, as is the narrowing spread between choice and select values.