The live and feeder cattle futures hit all-time highs in September of 2023 but haven’t returned to those levels for several months despite record high cash trade.
So what’s keeping the futures from returning to those highs?
Scott Varilek, Kooima Kooima Varilek, says the market has been in a tough of war. On one side the historically tight cattle numbers have pushed cash prices for fed and feeder cattle into record highs.
However, the factor holding the market back has been the lack of confidence in the fund traders to buy due to Highly Pathogenic Avian Influenza in the dairy cattle herd.
Varilek says, “The stories and bearish headlines seem to never end and so the funds are hesitant,”
The result is the high prices of replacements, especially relative to live cattle futures, has made it difficult for feedlot operators and farmer feeders to lock in a profit.
Varilek says break evens on cattle are generally in the mid $180s and so it’s made feeding a risk.
However, he says the cattle inventory isn’t even into its tightest timeframe as numbers are expected to get smaller into the 4th quarter of 2024 and the first part of 2025.
So, Varilek is still optimistic the cattle market will be able to achieve all-time highs again in both cash and futures in the next few months.
