Chicago | Reuters—Chicago Mercantile Exchange live cattle futures dropped on Tuesday in a technical correction from a five-week rally and on concerns that high prices may cool beef demand, according to analysts.
Limited expectations for stronger cash prices also hung over futures.
“I think the market is sensing that the cash cattle rally is over for now,” said Cassie Fish, author of The Beef blog.
Fish said she expects to see record high retail beef prices continue to rise until consumer demand backs down.
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“It certainly creates some caution by those trading cattle futures from the long side that demand might decline because prices are so high,” Fish said.
The choice boxed beef cutout rose $3.51 to $316.83 per hundredweight on Tuesday, according to the U.S. Department of Agriculture (USDA). Select beef gained $2.99 to $292.09 per cwt.
Higher beef prices have helped to shore up margins for beef packers, who on Tuesday were estimated to be making $17.90 per head. That was up from $6.90 per head on Monday and losses of $35.35 per head a week ago, according to livestock marketing advisory service HedgersEdge.
CME December live cattle futures LCZ24 settled down 1.400 cents at 186.525 cents per pound. CME November feeder cattle FCX24 ended down 3.100 cent at 246.475 cents per pound.
Benchmark CME December lean hog futures LHZ24 fell 0.575 cent to finish at 75.225 cents per pound.
