As a fundamental analyst, I was taught years ago that heavyweight cattle were always bearish toward cattle prices. But last year I had to disregard this knowledge. Had I not done so, our clients would have been run over by a bull market.
However, early in 2025, it appears that record heavyweight cattle are contributing to a top in the market. Yes, it appears that the bull market is on hold. The top was formed in futures at the end of January. I doubt this is a major top, but it could be. Listed below are the bearish fundamentals that have developed:
Continued record heavyweights.
Packer margins deeply in the red for months.
Calf crop larger than expected in the annual inventory report (100%).
Beef imports that surged higher last year.
A strong dollar encouraging imports and slowing exports.
Mexican border reopening in February.
Uncertainty regarding tariffs.
Finally, and perhaps most importantly, a possible crack in consumer demand for beef.
By Dennis Smith
February 18, 2025
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