U. S. cattle futures recovered slightly on Monday of this week following last Friday’s tumble to the lowest level in more than two years amid growing concern that contracting global economies will reduce demand for high-priced beef.
December live cattle closed up 1.550 cents at 83.100 cents per lb. and February was up 1.225 at 82.675. January feeder cattle were up 1.250 cents at 87.900 and March up 1.650 to 86.925. Short covering, prompted by the higher stock market and a lower dollar, rallied futures.
“Everyone is scared. The health of the global economy is not good and our demand base has been destroyed,” said Parker McMahan, senior research analyst with LINN Group, following last Friday’s close in which live cattle reached their lowest level since June 2006 and posted life-of-contract lows in all months.
Part of the recent pressure was coming from liquidation of long positions by index funds. Falling crude oil prices as well as sharp price declines in other commodities have kept long liquidation active.
Cash cattle traded $3 per cwt lower last Thursday at $87 per cwt and beef prices fell to a one-month low. Packers are pulling back bids due to sagging profit margins and general lack of demand for beef.