U.S. livestock: Cattle sink on lower beef, slowing demand

CME April 2019 live cattle futures with 20- and 50-day moving averages. (Barchart)

Chicago | Reuters — U.S. live cattle futures declined for a second straight session on Wednesday as lower beef prices and seasonally slowing demand for the red meat triggered profit-taking and technical selling, traders and analysts said.

Traders are awaiting the next wave of cattle sales at U.S. Plains feedlot markets, but cash market bids and offers remain far apart so active sales appear unlikely to occur until late in the week, they said.

Futures climbed to multiweek highs late last week and revisited the peaks early on Monday after higher cash cattle trade over the weekend. But the market has been retreating since then.

“Technically, the market looks pretty soft right now,” said Doug Houghton, analyst with Brock Associates. “We had a bump-up on Monday after the weekend. But now the beef market is deteriorating and we’re going into a seasonally weak period for beef demand.”

Retailers tend to feature pork specials in February instead of beef. Meanwhile, winter weather is slowing restaurant traffic in parts of the U.S., leading to a supply backlog.

The U.S. Department of Agriculture (USDA) quoted the choice boxed beef cutout value at $216.44/cwt late on Wednesday, down 72 cents from the prior day (all figures US$). The Select cutout was down 99 cents at $212.01/cwt.

Chicago Mercantile Exchange April cattle futures fell 0.9 cent to settle at 126.975 cents/lb. Selling accelerated as the contract breached chart support at its 18-day moving average late in the session.

Feeder cattle futures followed live cattle lower, with the actively traded March contract ending down 0.875 cents at 143.525 cents/lb.

Lean hog futures ended mixed. Nearby contracts fell on ample supplies and weak pork prices, while deferred months advanced on optimism for a U.S. trade deal with China, which could revive U.S. pork exports to the country.

U.S. President Donald Trump said trade talks in Beijing were “going along very well” as the two sides try to resolve their seven-month tariff war.

U.S. pork exports to China have slumped as Beijing raised tariffs on shipments last year in retaliation for U.S. duties on Chinese goods. Pork supplies in the U.S. have swelled.

The wholesale pork carcass cutout value fell by $1.34 on Wednesday to $63.88/cwt, the lowest in more than six years, according to USDA data.

April lean hogs ended down 0.55 cent at 59.775 cents/lb.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.

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