AMARILLO, TX – A widening gap between cash cattle prices and futures is making risk management more difficult for feedlots already operating in a volatile market. Sidney Abbott of OT Feed Yard and Research Center says cash and futures have been sending different signals for weeks.
Abbott says spreads near $15 per hundredweight have appeared between cash cattle and nearby futures. She also says recent market declines of roughly $30 per hundredweight can translate into about $600 to $800 per head in value.
That creates added risk for feeders trying to hedge cattle purchases and protect margins. A futures market moving sharply below cash can complicate breakeven calculations and marketing decisions.
Abbott says futures have reacted heavily to headlines involving packing capacity and beef imports, while physical cattle supplies remain tight. She expects the gap between futures and cash to narrow.
For cattle feeders, the key issue is managing price exposure when market signals diverge, and volatility remains elevated.
Farm-Level Takeaway: Wide cash-futures spreads increase hedging risk and make feeder cattle marketing decisions more difficult.