Takeaway

The presenter argues that cattle futures are experiencing a technical corrective rally supported by last week’s bullish USDA On-Feed report, pointing to an inverted head and shoulders pattern in feeder cattle. However, physical fundamentals remain distorted as ICE raids in Kansas curtailed the non-holiday cattle slaughter to a record low 484,000 head, depressing Northern cash leverage. Meanwhile, soybeans and hogs are failing to sustain upside momentum due to unresolved China tariffs on beans and lack of fund short-covering across livestock.

What the presenter said

• [00:00:35] Feeder cattle are displaying positive technical setups following a bullish USDA On-Feed report.
• [00:00:55] The on-feed data provided a "shot of adrenaline" that created an upside price gap that held for three consecutive sessions.
• [00:01:35] Feeder cattle charts have formed an inverted head and shoulders pattern that projects an $8 to $12 move higher.
• [00:02:07] Live cattle charts appear to be finishing a three-wave Elliott Wave correction, which typically sets up an "A wave" higher.
• [00:03:30] Sustaining price action above last week's gap opens the door for the market to fill higher overhead gaps left weeks and months ago.
• [00:03:50] Physical cash cattle have split into a two-tiered market, with the South steady at $226 while the North fell $3–$4 to $219.
• [00:04:35] A market where the South leads cash trade is historically not a fundamentally bullish indicator.
• [00:04:50] Packer slaughter reductions and ICE raids in southwestern Kansas have severely damaged producer leverage in the North, where even one extra steer is "too many steers."
• [00:05:06] Total weekly cattle slaughter came in at 484,000 head, a record low for a non-holiday week.
• [00:08:09] Hogs failed to sustain Friday's 80–90 cent gain post-USDA Hogs and Pigs report, breaking lower on poor underlying cash demand.
• [00:08:58] Current slaughter and pork fundamentals contradict the supposedly supportive numbers from the hogs report.
• [00:09:07] Funds remain net short in hogs and did not initiate short-covering despite the report's bullish headline print.
• [00:09:24] Soybeans are pacing the grain sector lower after China failed to remove the 10% tariff on US soybeans over the weekend, despite dropping tariffs on other ag commodities.
• [00:11:35] Trade deal announcements from the administration continue to lack specific details, setting up market disappointment when elevated expectations are not fulfilled.

Trade ideas

None stated.

The presenter outlines a technically constructive short-term view for feeder and live cattle if gap support holds, but maintains a cautious outlook on grain and hog markets due to heavy fund shorts, unsupportive cash demand, and tariff friction.

Levels and data cited

• Southern cash cattle: $226 (fully steady week-on-week)
• Northern cash cattle: $219 (down $3 to $4 from the prior week)
• December feeder cattle futures: Gap area sits "just above 230"
• Hog futures / Cash: Failed initial post-report rally of 80–90 cents; "high 20s" cited for wean pigs
• Weekly cattle kill: 484,000 head (record low for a non-holiday week)
• Weekly hog kill: Running nearly 50,000 head above year-ago levels
• China tariffs: 10% tariff dropped on select ag products, but retained on soybeans
• Positioning: Funds holding record-length net short positions in soybeans and remaining net short in lean hogs

Risks and what would invalidate this

• Speculative commitment: Cattle rallies have lacked expanding open interest, showing funds and speculators have not fully bought into the move.
• Cash market divergence: The South leading cash trade historically undermines sustained fundamental rallies in cattle.
• Packer capacity: Continued slaughter disruptions from ICE raids or reduced packer shifts will keep leverage stacked against cattle producers.
• Trade policy risk: Vague trade deal frameworks risk recurring liquidation across grains if purchase details disappoint.
• Export logistics: Logistics surrounding China fulfilling 25 million metric tons of soybean commitments remain questionable with the 10% tariff still in effect.