Extreme. That might be the best word to describe the current cattle market scene. We’ve recently seen plenty of records reached in both cash and futures markets, many setting a new high-water mark from one set just the day or week before. For instance, the 5-Area Weekly Average Steer price has set a record high in each of the last four weeks. The latest CME feeder index set a record high of $281.07 per hundredweight, up nearly $20 in just this month. Managed money holds record-large net long positions in both live and feeder cattle. We recently saw live cattle open interest make a nine-year high. International trade disruptions have also been part of the mix, such as USDA APHIS halting Mexican feeder cattle imports for the last couple of months—while remaining tight-lipped on the matter. And as of this past weekend, the U.S. is set to impose tariffs on imports from Mexico and Canada. No one really knows how that story will play out. All in all, record-high prices, global trade disruptions, and record-long speculative exposure have this market packed with explosive material.

Looking at the day-to-day over the past week, negotiated cash markets for fed cattle on the plains traded mostly steady. In the South, cattle traded at mostly $208 per hundredweight. In the North, cattle traded at $208 to $210 per hundredweight and $330 dressed.

Analysts estimated weekly slaughter at 600,000 head, up 1,000 head from last week and down 33,000 head versus last year. Year-to-date slaughter through the first five weeks looks to be down 43,200 head. Cattle weights over the same period are up about 40 pounds versus year-prior levels.

This continues the 2024 trend, where actual slaughter data dropped 974,700 head, or -3.02%, year-over-year. Dressed cattle weights averaged 27 pounds more in 2024; however, this resulted in a slightly higher increase in beef production of +0.14%. Indeed, larger dressed weights in 2024 translated to an equivalent of nearly 1 million head of additional cattle slaughtered.

The contra-seasonal rally in boxed beef prices stalled, with choice nearly unchanged on the week at $327.68 per hundredweight, down $0.24 on the week.

What to expect in the cash market looking forward? Looking at the 5-Area weekly steer prices over the last 16 years for the 17-week period from January 1 to the end of April, we made highs in January only twice—once due to COVID in 2020 and once in 2015 (the very beginning to the backside of the last bull cycle). However, even in 2015, after peaking at $169.67 per hundredweight in the second week of January and making a low in the last week of February at $158.44, prices managed to climb back up to $167.57 by the first week of April. The 5-Area reached its high only twice in the month of February in the last 16 years (2018 and 2012).

Considering the recent blaze higher in cash pricing, it appears we are overdone, as packers have improved their inventory position to a level not seen in months. Cattle feeders still retain leverage moving forward, although not to the same extent as over the last couple of months. Match this with the seasonal downturn in beef demand typically observed through February, and the cash fed cattle market is likely to dip lower. However, the historical 5-Area Weekly Average Steer price trend suggests strength to resume as we get into March and spring nears.

April live cattle futures finished down $0.725 per hundredweight for the week at $202.30 after trading as high as $207.725 early in the week. The drop from the highs was mostly a function of a sharply overbought market. Support kicked in at the 10-day moving average, with April managing to close above it on both Thursday and Friday after piercing through it briefly on both days.

The latest CFTC Commitment of Traders report for the close of Tuesday, January 28, revealed managed money net long 156,836 contracts in live cattle, an addition of 7,080 contracts from the week prior. This is a new record-long position by managed money, taking out the old record of 155,183 from April 2019.

March feeder cattle futures finished down $0.85 per hundredweight for the week at $275.725 after trading as high as $279.825 earlier in the week. Support also kicked in at the 10-day moving average, settling above it after briefly punching through the last two days of the week.

The COT revealed managed money net long 27,727 contracts in feeder cattle, a decrease of 256 contracts from the week prior.

The January 1 Cattle report, released Friday afternoon by USDA, offered little deviation from analyst estimates. The total number of cattle and calves in the U.S. landed at 86.7 million head, or 99.4% of last year. The beef cow herd came in at 27.9 million head or 99.5% of last year. The beef replacement heifer number was at 4.7 million head, or 99% of 2024. Feeder cattle and calves outside feedyards: at 24.5 million head, or 99.3% of last year.

In summary, the numbers do not reflect much heifer retention over the past year. The report suggests 2025 will likely be another year of declining cattle numbers. Seeing the number of feeder cattle and calves outside feedyards equal to year-prior levels indicates tighter placements moving forward. Calculations for culling rates are still around 10%, whereas a number below 9% is where the steadying of the beef cow herd occurs, followed by expansion.