Cattle Market Analysis
As of February 7, 2025, the cattle market has begun to correct, with prices retreating from a high of 199.80. My key support level is at 195.35, with a potential downside target of 188.00. This correction reflects broader market sentiment, which has been shaken by recent developments in the livestock industry, particularly concerns stemming from the spread of Highly Pathogenic Avian Influenza (HPAI) H5N1.
The detection of H5N1 in dairy cattle herds has raised alarms, though no cases have been reported in beef cattle. However, the uncertainty has created hesitancy in the market, leading to increased volatility. According to reports, over 600 dairy herds have been affected, primarily in California (source: Johns Hopkins). While the impact on beef cattle remains minimal, market psychology has contributed to a defensive posture among traders.
Feeder Cattle Market Update
Feeder cattle began a short move on February 4, 2025, at 270.00, with my target set at 261.75 and support at 255. This downtrend aligns with broader concerns in the cattle sector, as producers and traders watch for further fallout from the bird flu outbreak. Seasonal trends also suggest we could see continued pressure in feeder cattle prices, but we’ll need to monitor how demand responds in the coming weeks.
Hog Market Insight
While the cattle market experiences corrections, the hog market has established a confirmed uptrend. My current target for hog futures is 95.00, supported by strong seasonal demand and tighter supplies. Unlike the cattle market, the hog sector has not been directly impacted by bird flu concerns, providing a relative sense of stability.
Export demand has been robust, particularly from Asian markets. China, a key buyer of pork, has ramped up purchases due to its own domestic production challenges. This demand provides additional support to the uptrend in hog futures. Should this trend continue, we could see further upward momentum, especially if the supply chain remains tight.
Bird Flu Concerns in the Livestock Sector
The bird flu outbreak has shifted market dynamics across livestock sectors. While the virus has primarily affected poultry, its recent jump to dairy herds has spooked market participants. The potential for cross-species transmission remains a key concern, even though no cases in beef or hogs have been reported.
According to the FDA, milk and meat from infected cattle pose no health risks to consumers as pasteurization and cooking effectively neutralize the virus (source: FDA). However, the economic implications for producers, particularly those in dairy, could be significant. Reduced milk production and herd culling are driving losses estimated at $100–$200 per cow (source: AVMA).
For cattle and hog producers, these developments underscore the importance of vigilant risk management and strategic hedging in navigating uncertain times.
Final Thoughts
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.
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John S. Simpson Jr.
Senior Market Strategist
Walsh Trading
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