Beef Futures Rally as Cattle Markets Show Mixed Momentum Early Week

The cattle markets demonstrated notable strength in early February trading, with beef futures and related commodity contracts posting significant gains across multiple segments. Live cattle futures surged 50 to 70 cents during Monday’s midday session, reflecting broader market optimism in the livestock sector.

Live Cattle Futures Post Strong Midweek Advances

Cash market trading found stabilization at $233 to $236.50 for live cattle and $370 for dressed beef, establishing a foundation for sustained momentum. Feeder cattle futures showed even more impressive performance, advancing $1.50 to $1.75 on front month contracts, signaling strong demand expectations for young livestock.

The CME Feeder Cattle Index declined $1.75 to close at $363.48, reflecting broader consolidation following the recent rally. These movements suggest active participation from livestock producers and feedlot operators responding to market signals in both live and feeder segments.

USDA Cattle Inventory Data Shows Structural Tightening

Recent USDA Cattle on Feed reports unveiled important shifts in market structure. December placements fell 5.38% year-over-year to 1.554 million head, indicating reduced pressure from incoming cattle supplies. Conversely, marketings increased 1.78% compared to the prior year, reaching 1.773 million head, demonstrating sustained demand for finished cattle.

The January 1 on-feed inventory totaled 11.45 million head, representing a 3.15% decline from the previous year’s level. This contraction reflects tighter supplies that are supporting beef futures prices. Notably, January 1 heifer inventory fell 3.07% year-over-year while steer inventory declined 3.22%, with heifers now comprising 38.73% of total on-feed cattle.

Beef Market Dynamics: Cold Storage and Boxed Beef Trends

Cold storage data provided additional support for the optimistic beef futures outlook. Beef stocks declined 3.51% year-over-year as of December 31, settling at 437.46 million pounds. While stocks increased 2.8% from the previous month, December marked the lowest total since 2009, tightening fundamental supply dynamics.

The USDA’s Boxed Beef pricing report from Monday morning showed advancing prices across quality grades. The Choice-to-Select spread compressed to $3.28, reflecting narrower margin opportunities. Choice beef boxes advanced 33 cents to $365.25, while Select grade gained $3.58 to $365.97, signaling balanced demand across the quality spectrum.

Cattle Slaughter and Market Outlook

Federally inspected cattle slaughter totaled 535,000 head during the most recent reporting week, declining 27,000 head from the previous week and 58,858 head below year-ago levels. This moderation in slaughter pace, combined with reduced on-feed numbers, continues supporting the structural foundation for beef futures strength.

Futures contracts reflected this optimistic backdrop, with February Live Cattle advancing $0.700 to $235.600, April Live Cattle gaining $0.575 to $237.500, and June Live Cattle rising $0.625 to $233.125. Feeder cattle futures also posted gains, with January contracts up $1.500 to $366.300, March advancing $1.750 to $361.925, and April rising $1.725 to $360.475.

The convergence of tighter cattle supplies, reduced cold storage levels, and advancing boxed beef prices creates a supportive environment for beef futures performance through the first quarter of 2026. Market participants should monitor upcoming USDA reports for further inventory developments that could impact near-term beef futures trajectories.