Cattle Prices Soar Amid Record-low Herd Size and Holiday DemandCME: Live Cattle Futures ( CME:LE1! )
CME live cattle futures market rallied last week. February 2026 contract rose $3.15 to settle at $227.15 (per 100 pounds) on Friday, gaining $9.30 or 4.63% on the week.
In the spot market, the National Daily Cattle & Beef Summary shows that the Weekly Average Price of Choice Cutout was $361.20 per 100 pounds as of December 5th. This is $46 or 15% above the year-ago price, and $83 or 30% above the 5-year average.
A major driver of the rising beef prices stems from a record low cattle supply. The start of 2025 saw the smallest national herd since 1951. Meanwhile, beef consumption increases due to the holiday season as well as the cold weather. Low supply and high demand are a recipe for higher prices.
November WASDE Report
On November 14th, the US Department of Agriculture (USDA) published an update on World Agriculture Supply and Demand Estimates, also known as the WASDE report.
November WASDE is bullish on beef and cattle:
• For 2025, beef production is lowered, as reduced steer and heifer slaughter and lower weights are partially offset by higher expected cow and bull slaughter.
• For 2026, beef production is lowered on reduced steer and heifer slaughter, with the slower rate of fed cattle marketings expected to carry into the first half of 2026.
• The beef import forecasts for 2025 and 2026 are unchanged from the previous report based on U.S. Census data reported through July. Beef exports are reduced in the third quarter of 2025 but remain unchanged for the outlying quarters of 2025 and 2026.
While the November WASDE forecasted lower cattle prices for Q4 2025 and 1H 2026, I expect the December WASDE to raise its price forecasts based on recent market rallies.
July Cattle Inventory
The U.S. cattle herd totaled 94.2 million head as of July 1, 2025, according to the latest bi-annual Cattle report from the USDA’s National Agricultural Statistics Service.
Among the total herd, 38.1 million were cows and heifers that have calved. The report also breaks down the numbers by category, with 28.7 million beef cows and 9.45 million milk cows counted nationwide. The 2025 calf crop is projected at 33.1 million head, while 13 million cattle are currently on feed.
The cattle cycle is the natural expansion and contraction of the U.S. cattle herd — which is tied to supply and demand. It typically occurs every eight to 12 years. When producers can get higher prices, they will likely retain more females, called heifers, for breeding. When the cattle supply increases, prices eventually go down and the herds contract again.
However, if farmers begin retaining heifers to put into the breeding herd, it will first reduce the total domestic beef production because we have fewer animals going to the feedlot. Therefore, even though higher beef prices encourage heifer retention, I expect the number of marketing cattle to remain low for the next 6-12 months.
Partially offsetting the impact of smaller herd numbers is the fact that the U.S. is producing bigger cattle. Incremental supply, mainly for ground beef, also comes from beef imports.
Trading with CME Live Cattle Futures
Futures market shows bullish sentiment. CFTC’s Commitments of Traders report shows that, as of October 28th, CME live cattle futures ( NASDAQ:LE ) have total open interest (OI) of 343,707 contracts.
• “Managed Money” holds 136,302 Long contracts, 21,163 Short contracts, and 35,555 contracts at spread positions.
• The long/short ratio of 6.4-to-1 shows that “Smart Money” is bullish on Live Cattle.
A trader sharing a similar bullish view could explore CME Live Cattle futures.
Live Cattle futures ( NASDAQ:LE ) have a notional value of 40,000 pounds (~18 metric tons). At Friday settlement price of $227.15 per 100 pounds, the lead February contract LEG6 is worth $90,860. To buy or sell one contract, a trader is required to post an initial margin of $3,300. The point value of Live Cattle futures is $400.
The futures contract has built-in leverage of 27.5:1 (= 90860 / 3300).
• If LEG6 goes up 5% to $238.51, a long position will gain $4,544 (= (238.51-227.15) * 400). This will be a hypothetical return of 137.7% (= 4544 / 3300).
• If LEG6 declines, the trader will see large losses due to leverage. To avoid unlimited exposure, the trader could enter the long position with a stoploss.
• For illustration, a stoploss at 220 for the 228 long futures order will cap the loss at $3,200 (=(228-220) * 400).
Happy Trading.
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
