U.S. livestock: CME live cattle drift lower

Lean hog futures end mixed

CME August 2021 live cattle (candlesticks) with Bollinger bands (20,2) and October 2021 live cattle (dark red line). (Barchart)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures drifted lower on Thursday in lacklustre trade, with disappointing weekly export sales data and softening wholesale beef cutout prices adding pressure, analysts said.

“The fact that the cutout on beef has been drifting lower just doesn’t give the market a lot of confidence that packers will be out there bidding aggressively on cattle anytime soon,” said Altin Kalo, economist at Steiner Consulting Group.

“That may change as we get closer to Labour Day. But for now, it’s just summer market doldrums,” Kalo said.

CME August live cattle futures ended down 0.125 cent at 121.125 cents/lb., with October down 0.25 cent at 126.525 cents (all figures US$). CME August feeder cattle finished up 0.425 cent at 157.375 cents/lb. but stayed inside of Wednesday’s trading range.

Wholesale beef prices have been sliding since early June and that trend continued on Thursday, with choice cuts down $3.01 at $269.87/cwt, according to USDA. Select cuts fell by $1.27, to $252.48/cwt.

Cash trade has stalled since market-ready cattle traded in the southern Plains on Tuesday at around $120/cwt.

On the export front, USDA reported export sales of U.S. beef in the week to July 8 at 9,300 tonnes, down 61 per cent from the previous week and 44 per cent from the prior four-week average.

In hog markets, lean hog futures closed narrowly mixed as traders awaited fresh market direction. Wholesale U.S. pork prices have firmed in recent days but weekly export sales have been slowing, especially to key buyer China.

CME August lean hog futures settled down 0.8 cent at 104.3 cents/lb. while October ended up 0.175 cent at 89.4 cents.

USDA quoted the wholesale pork carcass cutout up 83 cents at $119.52/cwt on Thursday afternoon, the highest since June 21. However, Kalo said, “There is not a lot of conviction that we are going to continue build on these wholesale prices for pork.”

USDA reported export sales of U.S. pork in the week to July 8 at 10,600 tonnes, down 76 per cent from the previous week and down 68 per cent from the prior four-week average.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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