As the U.S. cattle market transitions into the second quarter of 2025, live cattle futures consolidate near historic highs, reflecting a structurally tight supply environment, firm wholesale beef demand, and elevated packer margins. However, seasonal pressures, heavier carcass weights, and deteriorating feedlot margins complicate the near-term bullish narrative.

Futures Complex Overview

Front-month April Live Cattle (LEJ25) contracts traded near $187/cwt as of March 22, with June and August contracts pricing modest carry near $183 and $180, respectively. The Feeder Cattle complex remains supported, with April feeders (GFJ25) above $250/cwt, underpinned by limited calf availability and strong deferred demand from grass-based programs.

The CME Feeder Cattle Index stood near $245, while weekly USDA data pegged the 5-Area Weighted Average Steer Price at $205.30/cwt—up $5.02 from the prior week and nearly $18 over year-ago levels. This basis strength reflects aggressive packer bids amid tighter front-end supplies and robust boxed beef margins.

Boxed Beef Cutout and Primal Values

The Choice boxed beef cutout rose to $325.52/cwt for the week ending March 22, gaining nearly $6 week-over-week and $13 year-over-year. The Select cutout also advanced to $308.96, widening the Choice-Select spread to $16.56. Primal rib led the rally, jumping 5.2% w/w to $522.32—driven by both domestic retail movement and export interest.

Chuck and round values softened slightly, reflecting balanced demand and heavier carcass weights, while loin and brisket continued their seasonal firming trend. Cutout strength has kept packer margins positive, incentivizing throughput despite softer kill levels.

Slaughter and Production Trends

Weekly cattle slaughter dropped to 560,000 head, down 24k from the prior week and 33k below last year. Beef production fell to 487 million pounds, a 4.3% decline year-over-year. While carcass weights remain heavy, lower headcount continues to cap total output. Packers face a narrowing supply of market-ready cattle, particularly in the North, which is putting a floor under cash markets.

USDA’s February Cattle on Feed report showed February placements down 8% y/y, with on-feed inventories tightening. Early projections for the March COF report (to be released March 22) suggest continued placement contraction, setting the stage for tighter fed cattle availability through summer.

Trimmings and Grind Market

90% lean trimmings firmed to $381.94/cwt last week (+$1.32 w/w), while 50% trimmings surged 7% to $121.46/cwt, marking a fresh 2025 high. The widening 90-50 spread of $260.47 continues to reflect supply tightness in lean products and growing demand for grind material—driven by food service recovery and retail substitution amid rising middle meat prices.

Feed and Input Costs

Despite favorable feeder prices, input cost pressures persist. Corn futures remain elevated near $4.50/bu, and deferred contracts reflect concern over tightening old-crop supplies. Drought pressure remains concentrated in parts of the Southern Plains and Western Corn Belt, which may hinder spring pasture turnout and compress summer forage supplies.

Feedlot margins, already under pressure due to rising feeder prices and flat cash cattle bids in some regions, are approaching breakeven in several key feeding areas. This dynamic may limit aggressive placements in Q2, reinforcing deferred supply concerns.

Export Market and Trade Flows

USDA weekly export sales data show stable-to-strong commitments from core Asian buyers. Japan, South Korea, and China remain active, particularly for higher-value primals and short-plate products. A weakening U.S. dollar since early March has aided competitiveness, although continued strength in Australian supply and lower global beef prices may limit U.S. expansion in some markets.

Fund Positioning and Technical Landscape

Managed Money net longs in live cattle have contracted modestly from January highs but remain supportive. Open interest across April and June contracts shows signs of rebuilding after Q1 roll activity. Technically, June Live Cattle holds key support near $180, with resistance near $187. Breakout potential hinges on confirmation of supply tightening in upcoming USDA reports and continued boxed beef momentum into grilling season.

Forward Outlook

The current cattle market sits at a critical inflection point. Supply fundamentals remain bullish: tight on-feed numbers, lower slaughter, and resilient domestic and export beef demand all support a constructive Q2 outlook. However, macroeconomic uncertainty, margin compression at the feedlot level, and seasonal carcass weight gains could temporarily cap the upside in front-month contracts.

Key watchpoints ahead:

  • March 22 USDA Cattle on Feed report
  • Cutout performance into Easter and early grilling season
  • Feed cost volatility and spring grazing conditions
  • Packer kill incentives vs. slaughter-ready cattle availability

Barring a sharp reversal in beef demand or macroeconomic risk-off flows, the cattle futures complex appears poised to grind higher into summer. Deferred contracts offer relative value given the projected supply cliff in late Q2 and Q3.