U.S. livestock: Cattle futures extend slide as corn prices charge higher

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — U.S. cattle futures closed lower on Thursday for the 10th time in the last 11 sessions, pressured by fund-driven long liquidation and soaring corn prices that threaten cattle feeders’ profits, traders said.

Chicago Mercantile Exchange June live cattle futures settled down 1.4 cents at 115.85 cents/lb. (all figures US$).

CME August feeder cattle futures ended down 3.55 cents at 148.375 cents/lb., pressured as Chicago Board of Trade corn futures climbed their daily limit and neared an eight-year high above $6 a bushel.

Rising prices for corn, the main cattle feed grain, could prompt feedlot operators to cut their losses by selling cattle more aggressively to meat packing houses.

“Feedlots have lost all leverage when bargaining with packers. They just want to move the cattle out of the lot as soon as they can, to minimize the expense,” said Dan Norcini, an independent trader.

Meanwhile, commodity funds hold a net long position in CME live cattle futures, leaving the market vulnerable to bouts of long liquidation.

The sell-off in cattle futures comes despite rising wholesale beef prices. Choice cuts of boxed beef rose $1.85 at $282.31/cwt on Thursday, a 10-month high, and select cuts were up $1.81 at $273.69/cwt, according to the U.S. Department of Agriculture.

Hog futures also declined on Thursday, with CME June lean hog futures down 0.975 cent at 103.55 cents/lb.

After the close, USDA’s monthly cold storage report showed U.S. frozen pork belly stocks at 35.260 million lbs. as of March 31, down 55 per cent from a year ago. Frozen beef stocks fell to 483.65 million lbs., down four per cent from a year ago.

USDA’s weekly export sales report showed net sales reductions for pork totaling 22,100 tonnes in the week ended April 15, including significant cancellations for Mexico that the USDA attributed to a reporting error dating from 2020. But pork shipments for the week totaled 43,900 tonnes, a marketing-year high.

Traders await USDA’s monthly Cattle on Feed report on Friday. Analysts surveyed by Reuters on average expect USDA to show a 33.7 per cent increase in the number of cattle placed in U.S. feedlots in March compared with the previous year.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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