Cattle futures on the Chicago Mercantile Exchange (CME) climbed sharply on Tuesday, reaching their highest levels in over three months. The rally was fueled by robust cash market prices and growing expectations that supplies of livestock in the United States will remain constrained throughout the year, according to market analysts.
Supply Fears and Import Ban Drive Prices Up
A key factor supporting the market is the ongoing ban on cattle imports from Mexico. Traders anticipate that Washington will maintain this restriction following recent detections of the New World screwworm in Mexican animals. The US has largely halted imports of Mexican livestock since May 2025 in an effort to prevent the entry of this flesh-eating parasite.
"There's ideas that they won't resume anytime soon based on the most recent screwworm cases last week," stated Doug Houghton, an analyst with Brock Associates. This sustained blockage tightens the available supply within the US, adding upward pressure on prices.
On the trading floor, CME March feeder cattle futures leaped by 3.450 cents to settle at 359.025 cents per pound. This marked the contract's highest point since October 23. Similarly, CME February live cattle futures advanced by 0.750 cent to finish at 236.625 cents per pound, matching its Monday peak, which was the highest price recorded since October 24.
Meatpackers Feel the Squeeze as Losses Mount
The soaring prices for live cattle are severely impacting the profitability of meatpacking companies. These firms must pay more to procure animals to process into beef products like steaks and hamburgers. The rising costs are eroding their margins significantly.
Data from the livestock marketing advisory service HedgersEdge.com reveals the extent of the strain. Packers were estimated to be losing approximately $262.60 for every head of cattle slaughtered on Monday. Although the loss narrowed slightly on Tuesday, it remained substantial at an estimated $229.75 per head.
Brokers confirmed that cash prices have also started the year on a strong footing, further compounding the challenges for processors who rely on the spot market.
Lean Hog Market Takes a Breather
In a contrasting move within the livestock complex, the CME lean hog market experienced a slight pullback. February lean hog futures closed 0.475 cent lower at 85.675 cents per pound. This decline came after the contract rallied to an October high in the previous session.
Analyst Doug Houghton commented on the retracement, suggesting, "They probably ran out a little bit more than they needed to yesterday." The market is also digesting recent US Department of Agriculture data, which showed the US hog herd as of December 1 stood at 75.5 million head, an increase of about 1% compared to the same date a year earlier.
The overall picture in the US livestock sector points to a period of heightened volatility, with cattle markets reacting strongly to supply-side constraints and trade policies, while the hog market shows signs of balancing after a recent surge.
