The cattle futures market has seen a significant uptick in activity, with both live and feeder cattle contracts closing higher ahead of the highly anticipated Cattle on Feed report from the United States Department of Agriculture (USDA). This report, set to be released on Friday, is expected to provide crucial insights into the current state of the cattle industry, influencing market sentiment and trading decisions.

Bullish Momentum Builds as Traders Anticipate USDA Insights

Robust Direct Cash Cattle Trade Supports Futures Gains

The Chicago Mercantile Exchange witnessed a surge in live and feeder cattle futures, with December live cattle closing $1.37 higher at $189.25 and February lives closing $1.32 higher at $189.95. Similarly, November feeders closed $1.30 higher at $248.52, and January feeders closed $1.70 higher at $245.52. This upward momentum can be attributed to the development of a light to moderate direct cash cattle trade on Thursday afternoon, with live deals in the South reaching $189 to mostly $190 live, $2 higher than the previous week's weighted averages. In the North, live deals were marked at $190 to $192 live, while dressed deals were at $298, $2 higher than the prior week's weighted average basis in Nebraska.

Steady to Higher Prices at Nebraska Livestock Market

At the Huss Livestock Market in Nebraska, a notable offering of bawling spring calves and yearling feeders was observed. Steer calves weighing 500 to 600 pounds and calves over 600 pounds were steady to $4 higher, while heifer calves weighing 450 to 650 pounds were steady to $5 lower. However, heifer calves weighing 650 to 700 pounds were sharply higher. Yearling feeders were also $2 to $5 higher, indicating strong demand from buyers in the crowd. The USDA reported that the overall demand was moderate to good, despite a decline in receipts compared to the previous week and the same period last year. The feeder supply included 65% steers, with 46% of the offering weighing over 600 pounds.

Boxed Beef Prices Decline, but Demand Remains a Concern

In the boxed beef market, Choice beef closed $0.24 lower at $321.17, and Select beef closed $1.43 lower at $294.34, resulting in a Choice-Select spread of $26.83. The decline in boxed beef prices was attributed to light demand for the moderate offerings. The estimated cattle slaughter for the week was 124,000 head, up 6,000 from the previous week but down approximately 1,500 compared to the same period last year.

Lean Hog Futures Pressured by Weaker Cash Hog Prices

In the lean hog futures market, December contracts closed $1.52 lower at $78.65, and February contracts closed $0.60 lower at $82.80. This downward trend was driven by a combination of steady to lower cash hog prices, lower midday pork prices, and bearish weekly export sales. Cash hog prices closed sharply lower, with processors being more aggressive in their procurement throughout the week, likely having secured their needed numbers and showing little motivation to do further business. While global demand for U.S. pork has been strong, this week's export sales data showed a significant decline, adding to the bearish sentiment in the market. Supplies of market-ready hogs remain ample, contributing to the pressure on prices.

Pork Cutout Values Decline, but Demand Remains a Mixed Bag

The pork cutout value closed $0.07 lower at $98.15, with bellies and butts experiencing sharp declines, while loins, ribs, picnics, and hams were higher. The estimated hog slaughter for the week was 487,000 head, up 1,000 from the previous week and nearly 5,000 higher compared to the same period last year. The industry continues to monitor the inconsistencies in domestic demand and its impact on prices, as the overall supply of market-ready hogs remains ample.