Chicago | Reuters — Chicago Mercantile Exchange live cattle futures dropped for a third straight session on Wednesday on weakening cash cattle prices and plentiful supplies of market-ready animals, traders said.
Actively traded CME August live cattle futures settled 1.35 cents lower at 99.05 cents/lb., its lowest since April 4 (all figures US$). June cattle ended down 1.15 cents at 101.825 cents.
Futures are down more than five per cent this week as packers have been buying cattle at sharply lower prices at U.S. Plains feedlot markets. The bulk of the week’s cattle offerings remain unsold, but cash prices are expected to remain weak, traders said.
Fed cattle supplies are expected to remain ample for at least the next month, they said.
“The packers have the market power and they are flexing their muscles right now,” said Rich Nelson, chief strategist with Allendale Inc.
A moderate number of cattle at U.S. Plains feedlot markets have already traded from $112-$118/cwt, well below last week’s sales of mostly $122/cwt, traders said.
No cattle were sold at Wednesday’s Fed Cattle Exchange auction.
Wholesale beef prices have edged lower in recent days, but packer margins remain stout. The average beef plant margin on Wednesday was estimated at $173.95 per head, up from $142.55 a week ago, according to livestock marketing advisory service HedgersEdge.com.
Feeder cattle futures fell in tandem with sinking live cattle, with the actively-traded August contract ending 1.725 cents lower at 136.725 cents/lb.
Lean hog futures rebounded from the prior day’s losses, supported by tightening hog supplies and expectations for seasonally improving demand for pork.
Gains, however, were capped by concerns that exports could slow if negotiations for a revamped North American Free Trade Agreement (NAFTA) are unsuccessful.
CME June hogs gained 1.175 cents to 75.9 cents/lb. while July hogs ended 1.025 cents higher at 78.725 cents.
— Karl Plume reports on agriculture and agribusiness for Reuters from Chicago.