Chicago | Reuters – Chicago Mercantile Exchange live and feeder cattle futures tipped lower on Thursday as falling wholesale boxed beef prices and long liquidation pressured the market, analysts said.
A decline in boxed beef prices has made meatpackers, whose margins continue to remain in the red, less willing to pay up for cattle.
“The packers are less likely to make money, so they’re not going to be out there looking to buy cattle and that will sap some demand,” said Altin Kalo, economist at Steiner Consulting.
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Meanwhile, some market players are exiting their long positions ahead of the end of the year and following a sustained rally.
CME February live cattle LCG26 settled 1.15 cents lower at 228.40 cents per pound. March feeder cattle FCH26 ended 1.725 cents lower at 334.60 cents per pound.
On Thursday morning, the U.S. Department of Agriculture priced choice cuts of beef at $357.04 per hundredweight, up 95 cents from Wednesday. Select cuts dropped $2.38 to $344.05 per cwt.
The delayed Consumer Price Index on Thursday showed that consumer prices increased less than expected in the year to November. A jobless claims report showed new applications fell last week, reversing the prior week’s surge and suggesting labor market conditions remained stable in December.
Affordability challenges faced by U.S. consumers may be turning some away from purchasing beef, typically the priciest meat in grocery stores and restaurants.
Ahead of the USDA’s Cattle on Feed report on Friday, a Reuters poll of market analysts estimated the number of cattle placed in feedlots in November was down 8 per cent from the previous year.
Meanwhile, CME benchmark February lean hog futures LHG26 rose 1.125 cents to settle at 84.125 cents per pound.
Wholesale pork cutout prices were higher. The USDA reported that pork carcasses were up $2.18 to $100.72 per cwt, with ham prices rising and belly prices falling.
