Chicago | Reuters — U.S. live cattle futures fell on Monday, pressured by a softening in seasonal demand and the continued impact from backlogs at slaughterhouses, traders said.
Lean hogs also eased on profit taking, while feeder cattle also followed live cattle for a loss.
CME October live cattle futures fell 1.525 cents, to 108.35 cents/lb. (all figures US$). Most-active December cattle dropped 1.775 cents, to 110.825 cents.
CME January feeder cattle dropped 0.35 cent to 133.65 cents/lb. as rising grain prices translate to higher feed costs, cutting into profit margins.
“The trade believes we are out of the woods on these front-end cattle, with respect to the pushing back from the packer shutdown, but we aren’t through these cattle,” said Larry Hicks, CEO of CattleHedging.com. “Expect lower fed cattle prices and live cattle futures the balance of October.”
Hicks said heavier carcass weights are reminiscent of the end of 2015, when prices dipped and remained lower through the beginning of 2016.
“We’re not going to have the big first-quarter rally into April that everybody thinks we seasonally should,” he said.
Boxed beef prices gained, with choice cuts adding $1.15, to $215.21, and select cuts increasing $1.70, to $201.52.
Packer margins fell to $226.65 per head on Monday, down $73.10 from a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC.
Meanwhile, lean hogs ended lower as profit-taking pulled back the market after five days of gains.
Chicago Mercantile Exchange October lean hogs advanced 0.05 cent to 78.175 cents/lb. Most-active December hogs settled 0.5 cents lower at 66.625 cents.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.