- Solve real problems with our hands-on interface
- Progress from basic puts and calls to advanced strategies
Interactive Options Course
Posted May 28, 2025 at 10:30 am
Prices of live cattle futures have been soaring recently, as tight supply and healthy demand continue to push sentiment into bullish territory.
The cost of the continuous live cattle futures contract (LE) Tuesday remained at a nosebleed level of $210.475, essentially unchanged from the prior trade date, according to the IBKR Trader Workstation.
Source: IBKR TWS. Past performance is not indicative of future results.
The activity falls at the heels of depressed cattle inventory, amid prolonged droughts, high feed costs, and generally higher prices for pasturelands, which have compelled many producers to cull herds and delay rebuilding efforts.
The U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS) counted 86.7 million head of cattle and calves on U.S. farms as of the start of January 2025, a drop of 1% from the prior year, and reportedly the lowest trough since 1951.
Furthermore, a recent USDA-imposed ban on live cattle imports from Mexico – due to the continued and rapid spread of the New World Screwworm (NWS) – has also been contributing to a dimmer outlook on inventories and beef production.
Consequently, the USDA said it expects roughly 277 million fewer pounds of beef than previously estimated for 2025, amounting to around 26.42 billion pounds. This drop not only represents a 2% decline from the prior year, but the agency also anticipates another 5% plunge from this level in 2026, which would mark the fourth consecutive year of lower production volumes.
Meanwhile, demand for beef seems to remain fairly resilient, and with supply tight, and exports falling, ensuing higher producer prices are placing a financial burden on U.S. meat producers like Tyson Foods, Inc (NYSE: TSN) and Hormel Foods Corp (NYSE: HRL).
Tyson, for example, lost $181 million in the first half of 2025 in its beef segment, with its Chief Supply Chain Officer Brady Stewart commenting on the company’s recent second-quarter 2025 earnings call that “beef is experiencing the most challenging market conditions we’ve ever seen”. He cautioned that additional uncertainties pose added pressures on the industry given recent government-levied “tariffs and consumer pressure and inflation that we’re seeing in the marketplace”.
Against this backdrop, Tyson said it anticipates an adjusted operating loss of between $(0.4) billion and $(0.2) billion in fiscal 2025 in its beef segment – even as it hikes its costs to consumers amid “ongoing healthy demand” and higher year-over-year cattle costs.
Shares of Tyson shed roughly 0.30% on the day Tuesday to $55.37 and have sunk more than 4.15% year-over-year, while industry peer Hormel’s stock has plummeted nearly 14% over the past year to $29.86.
Source: IBKR TWS. Past performance is not indicative of future results.
Signals in the live cattle futures market appear to continue pointing towards bullish sentiment.
As of May 20, 2025, speculators increased their net long positions in live cattle futures contracts to 152,950, while producers upped their net short positions slightly to 180,581, according to the CFTC’s Commitments of Traders (COT) Report.
Total open interest amounted to around 398,324 contracts for May 23, 2025, a slight uptick from 396,840 on the previous trade date.
Given this picture, it’s likely new capital is entering the market, as open interest continues to climb, albeit on lower volumes. The activity might also be a confirmation that the rally is backed by fresh buying rather than simply short covering – potentially a healthy sign of trend continuation – and momentum – especially when pitted with higher prices.
For more in-depth details on live cattle futures contracts, as well as other agricultural products, including corn, soybeans, and Chicago wheat, explore CME Market Pulse. This tool offers timely, AI-powered insights into futures markets, providing updates daily, including settlement prices, daily changes, highs and lows, and year-over-year comparisons – helping traders and investors make more informed decisions by highlighting significant market movements and trends.
And for those looking to learn the essentials of what agricultural commodities are, how they’re traded, and the types of participants active in the markets, take our Traders’ Academy course ‘Investing in Agricultural Commodities’, where we also provide insights into the major risks these products face, and official reports that can provide some ways to anticipate and generally mitigate them. We also offer some historical, real-world examples of how agricultural commodities can impact financial markets, economies, and global trade.
—
IBKR Podcasts
Is It Time to Reap What We’ve Tariffed?
When Trade Wars Hit the Farm… Who Gets Plowed Under?
Lean Hog Futures – Is Anyone Bringing Home the Bacon?
Live Cattle Futures – Herd Around the World
Sugar Futures – Talk About a Cereal Killer
Eyepopping Corn Prices – Fueling Food Inflation
The War on Wheat – How Much Bread Is on The Table?
Traders’ Academy
Investing in Agricultural Commodities
Introduction to Grains and Oilseeds
Understanding South American Soybean Futures
Hedging with Grain and Oilseed Futures and Options
Traders’ Insight
Corn Sustainability in the United States
Navigating the U.S. Planting Season with Enhanced Risk Management
A Brewing Storm for Arabica Coffee
How Commodity Prices Impact Inflation
For specific platform feedback and suggestions, please submit it directly to our team using these instructions.
If you have an account-specific question or concern, please reach out to Client Services.
We encourage you to look through our FAQs before posting. Your question may already be covered!
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.
Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at ibkr.com.
Related Articles
Funny on how you people come out with all the bullish news on cattle when the market is at a top, never is a word mentioned when the market is at the bottom.