Chicago | Reuters — U.S. live cattle futures fell on Friday, pressured by softening prices for market-ready cattle and declining packer profit margins as wholesale beef prices continue to slide, analysts said.
Chicago Mercantile Exchange (CME) June live cattle futures settled down 1.825 cents at 93.9 cents/lb. and benchmark August fell 1.75 cents at 96.175 cents after hitting 95.7, a one-month low (all figures US$).
CME August feeder cattle futures closed down 0.55 cent at 134.175 cents/lb.
Market-ready cattle traded in the cash market on Friday as low as $100 per hundredweight in Texas, below Thursday’s trades at $105 and down from $118/cwt on Monday.
“We are seeing the cash trade weaken throughout this week,” said Brian Hoops, president of Midwest Market Solutions.
The daily U.S. cattle and hog slaughter has mostly recovered since April and early May, when the coronavirus pandemic sickened enough slaughterhouse workers to force numerous meat-packing plants to close temporarily. The cattle slaughter reached a two-month high on Thursday at 117,000 head, replenishing beef supplies.
As a result, wholesale beef prices have retreated sharply from historic highs, narrowing packer margins. The choice boxed beef cutout, an indicator of wholesale prices, fell on Friday afternoon to $261.48/cwt, down $10.78 from Thursday and down nearly $102 from a week ago, according to USDA.
“Cutout values continue to decline… with the big jumps in the slaughter numbers. And the steer weights are much heavier than a year ago,” Hoops said.
CME lean hog futures closed mostly higher on technical buying and a bounce on Wall Street after data showed an unexpected jump in U.S. employment.
“Lean hog futures are higher as the economy opens up and demand returns,” said Arlan Suderman, economist with INTL FCStone.
However, the spot June hog futures contract fell, pressured by a backlog of hogs still awaiting slaughter.
CME June lean hogs ended down 0.975 cent at 47.45 cents/lb. while most-active July futures settled up 0.35 cent at 53.925 cents.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.