U.S. livestock: Bearish USDA report rattles CME live cattle

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Friday finished sharply lower, hit by fund liquidation and the morning’s bearish U.S. Department of Agriculture Cattle on Feed report, said traders.

The report showed the number of cattle placed in feedlots in April hit a 14-year high for the month.

Traders said fund liquidation and diminished wholesale beef demand contributed to CME live cattle’s heavy losses.

CME’s livestock markets will be closed on Monday for the U.S. Memorial Day holiday.

June ended 1.225 cents/lb. lower at 122.7 cents, and August 2.45 cents lower at 118.95 cents. Both contracts finished below their respective 10-day moving averages of 122.893 and 120.02 cents.

Futures tumbled after the cattle report’s bearish April placement result, said Oak Investment Group president Joe Ocrant. But some still may consider futures’ discount to cash prices a buying opportunity, he said.

Packers this week paid $132-$133/cwt for slaughter-ready, or cash, cattle that last week ago brought $133-$134.

Processors purchased fewer cattle for next week with plants scheduled to shutdown on Monday’s holiday, the unofficial start of the summer grilling season.

Some processors avoided bidding up for supplies as National Beef Month in May winds down, allowing grocers to feature more pork and chicken.

Friday morning’s average wholesale beef price dropped 67 cents/cwt to $245.44 from Thursday. Select cuts fell 70 cents, to $218.28, USDA said.

CME feeder cattle tumbled almost three per cent on profit-taking, technical selling and live cattle futures’ selloff.

August feeders ended 4.175 cents/lb. lower, or down 2.6 per cent, to 146.95 cents.

Hogs notch new highs

Investors sold CME live cattle and simultaneously bought the exchange’s hog futures, which helped drive them to fresh contract highs, said traders.

They said sentiment over tightening seasonal supplies and grocers featuring more pork in the weeks ahead generated additional futures buying.

June closed 0.875 cent per pound higher at 81.825 cents, and marked a new high of 81.875 cents. July finished 1.325 cents higher at 81.9 cents, and hit a fresh high of 82.025 cents.

Friday morning’s average cash hog price in Iowa/Minnesota was $71.67/cwt in light volume, $1.78 lower than on Thursday, USDA said.

U.S. government data on Friday morning showed the average wholesale pork price was up 49 cents/cwt from Thursday to $90.79.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.

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