U.S. livestock: Live cattle sag as Wall Street retreats, grain prices rise

Wholesale ham prices supportive for hogs

CME February 2021 live cattle with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. live cattle futures fell more than two per cent on Monday, pressured by ample beef supplies and fund-driven selling as Wall Street equities declined, analysts said.

Feeder cattle futures fell even harder, dropping by three per cent as U.S. corn futures rose to almost $5 a bushel for the first time since 2014, threatening cattle feeding margins (all figures US$).

Chicago Mercantile Exchange (CME) February live cattle futures settled down 2.725 cents at 112.3 cents/lb. and CME March feeder cattle fell 4.2 cents to end at 136.025 cents/lb.

“Feeder cattle may have pulled the live cattle down,” said Doug Houghton, analyst at Brock Capital Management.

Worries about surging coronavirus cases weighed on global equity markets, a factor that tends to raise uncertainty about U.S. consumer demand for beef.

Wholesale beef prices rose on Monday, but ample supplies of cattle signaled a headwind, with average weights running higher than a year ago.

“Once we get into the second quarter (of 2021), there should be a drop-off, but right now, the live cattle market is looking at some big first-quarter supplies,” Houghton said.

Lean hog futures rose, bucking the weakness in cattle futures, with CME February lean hogs settling up 0.95 cent at 71.225 cents/lb.

Rising pork prices lent support. Wholesale ham prices have been particularly strong in recent days, reaching $72.83/cwt on Thursday, up from $56.20 on Dec. 28, according to the U.S. Department of Agriculture.

Monday’s midday USDA pork cutout data indicated a $25/cwt jump in ham prices to $98.24, catching traders’ attention. However, USDA’s updated afternoon price data, released after the CME close, showed a drop of $4.40, to $68.43/cwt, and the overall pork carcass price fell by 81 cents on the day.

— Reporting for Reuters by Julie Ingwersen in Chicago.

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