Chicago | Reuters — U.S. live cattle futures dropped to an eight-month low on Wednesday on weakness in the cash market and as boxed beef prices declined, traders said.
Lean hog futures also came under pressure.
Weak cash prices for cattle set a bearish tone for futures that will likely linger for the rest of the week, a trader said. Fed cattle traded for about $120-$121/cwt in Nebraska, down from about $123-$124/cwt last week, he said (all figures US$).
Cash cattle and futures have come under pressure from rising production after ranchers expanded their herds.
There were 12 million head of cattle and calves on feed for slaughter on April 1, the highest inventory for that date since the U.S. Department of Agriculture (USDA) began tracking the data in 1996.
Select-grade boxed beef on Wednesday fell $4.34, to $207.49/cwt, according to USDA data issued after the close of trading. Choice-grade boxed beef slipped 86 cents, to $223.01/cwt.
“It feels like fundamentally the boxed beef has been in a free fall,” a broker said.
June live cattle futures ended down 1.2 cents at 111.075 cents/lb. at the Chicago Mercantile Exchange (CME). The contract traded to its lowest price since early September. August live cattle dropped 1.675 cent, to 107.4 cents/lb.
August feeder cattle fell 1.725 cents to 143.875 cents/lb., while September was 1.625 cents weaker at 144.85 cents.
In the hog market, uncertainty about the potential for a deal to resolve the trade war between Washington and Beijing weighed on prices, traders said.
China and Hong Kong were the second biggest export market for U.S. pork prior to the start of the trade war. However, shipments of American pork to China declined after Beijing last year raised tariffs on imports from the United States to 62 percent as part of the tit-for-tat trade dispute.
U.S. President Donald Trump said on Wednesday he would be happy to keep tariffs on Chinese imports as the two countries prepare for new talks to try to rescue a faltering trade deal amid a sharp increase in U.S. duties.
Still, an outbreak in China of a fatal hog disease called African swine fever is expected to force China to increase total pork imports and boost demand for meat.
June lean hog futures fell 0.7 cent, to 88.55 cents/lb. at the CME. July lean hogs slid 1.375 cents to 90.75 cents.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.