By John S. Simpson Jr. | February 21, 2025
The livestock markets have experienced notable declines in recent sessions, reflecting a mix of profit-taking, shifting demand dynamics, and broader economic concerns. After a strong run-up in cattle and hog markets, traders are reassessing positions as technical levels come into focus and consumer demand signals show potential weakness.
Live Cattle: Breaking Key Support Levels
After weeks of strength, profit-taking has emerged in the live cattle market, pushing April futures below the critical $199.85 level. This move has now set a double bottom at $193.05, with key support at $192.73 and $190.66. If these levels hold, we may see consolidation, but a breakdown below could open the door for further downside.
Fundamentally, tight U.S. cattle supplies remain a supportive factor. The latest USDA data confirms the U.S. cattle herd is at its lowest level since 1951, constraining market-ready suppliesHowever, concerns over consumer demand and broader economic conditions—along with an overall pullback in financial markets—have added pressure to cattle prices.
Feeder Cattle: Retreating from $280, Holding at $268.40
The feeder cattle market also saw strong profit-taking after hitting our March contract target of $280.00. Prices have now pulled back to $268.40, holding steady, with support at $263.00.
Despite the pullback, the long-term supply picture remains supportive. Rising feed costs and continued tightness in feeder cattle availability should provide underlying support. However, short-term volatility remains a factor, especially with live cattle trending lower.
Hogs: Failed Breakout, Now Targeting Lower Support
As I mentioned in my previous report on February 10, 2025, hogs hit $94.75, just shy of my $95.00 target.
. However, profit-taking and weak consumer sentiment have led to a sharp pullback, with lean hogs breaking below $92.75. New support levels sit at $86.49 and $85.50, which will be critical to watch.
Market sentiment in the hog sector is being influenced by softening pork demand, weaker cutout values, and consumer uncertainty around protein consumption. The recent avian influenza outbreak has raised questions about consumer behavior, particularly in protein markets.
Bird Flu Concerns: Market Impacts
The H5N1 avian influenza outbreak continues to disrupt poultry markets, leading to higher egg prices and concerns about protein demand overall. While the direct impact on cattle and hogs remains unclear, consumer sentiment could shift if protein consumption patterns are affected.
Additionally, the outbreak has led to millions of birds being culled, impacting supply chains and pricing dynamics in related agricultural markets. While beef and pork remain unaffected from a supply perspective, demand-side concerns could play a role in price movement in the coming weeks.
Final Thoughts
In my opinion, the recent downturn in livestock futures is largely driven by technical corrections and profit-taking after weeks of strong gains. However, fundamental supply tightness in cattle markets remains intact, while hogs face more mixed signals due to demand uncertainty.
Bird flu fears remain a factor in market sentiment, potentially influencing consumer demand and market direction.
Key levels to watch:
- Live Cattle: Holding $193.05, with support at $192.73 and $190.66.
- Feeder Cattle: Sitting at $268.40, with support at $263.00.
- Hogs: Below $92.75, with next targets at $86.49 and $85.50.
As always, market conditions can shift quickly, and traders should remain vigilant, monitor key levels, and adjust strategies accordingly.
As always, this is just my opinion and should not be considered as financial advice. Market conditions can change rapidly, and it’s essential to stay informed and manage risk accordingly, as bird flu fears remain a factor in market sentiment.
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John S. Simpson Jr.
Senior Market Strategist
Walsh Trading
[email protected]
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