Cattle Futures Drop Amid Tariff Changes and Slow Sales

Cattle futures have tumbled as demand weakens and tariff changes loom. Export sales are down, signaling potential challenges ahead. Investors should monitor the impact on stock prices as these factors unfold.

Date: 04-04-2025

AI Rating: 4

Recent Trends and Effects on Livestock Prices
Live cattle futures have experienced significant losses, with prices dropping by $2.32 to $2.75. This downward trend can be attributed to slow cash sales activity, particularly in light of bids measuring $208 in the Southern U.S. and $212 in the North. With no sales reported during the Fed Cattle Exchange auction, investor sentiment might shift as uncertainty in demand looms.

The introduction of imposed tariffs under the 'Liberation Day' initiative has also created volatility. With Japan, South Korea, and China facing notable reciprocal tariffs, this could risk further reducing export opportunities for U.S. beef producers. Such changes can ultimately impact revenue growth for companies heavily engaged in beef exports. On the flip side, Australia and Brazil have baseline tariffs set at just 10%, marking competitive pricing that could entice purchases away from U.S. sources.

On the export front, preliminary data shows a total of only 9,261 MT in beef sales for the week leading up to March 27. Despite South Korea’s purchase of 3,400 MT, the overall outlook appears muted, especially with a year-over-year drop in beef exports totaling 6.9%. This kind of performance indicates a revenue challenge that may affect profitability moving forward.

The recent National Wholesale Boxed Beef report from the USDA also didn’t provide favorable news, with price declines in the wholesale meat market. The narrowed spread between Choice and Select beef further illustrates market softness, which might cause concern among investors looking at net income and gross profit margins across the beef production sector.

In summary, several factors—including slow cash sales, tariff introductions, decreasing export numbers, and weaker pricing in wholesale beef—indicate a challenging environment for investment within the livestock sector for the coming months.

Stocks: TSN CAG K HRL