Chicago | Reuters — U.S. cattle futures fell on Friday on weakness in the cash market, while hog futures ended mixed.
Cattle futures and cash prices have tumbled since a fire at a Tyson Foods slaughterhouse at Holcomb, Kansas, this month removed a key buyer from the market.
Some farmers have tried to delay cattle sales to meat packers in the face of low prices. However, that can be difficult because livestock need to go to slaughter when they are near a certain market weight. Otherwise, producers can be docked pay if the animals grow too heavy.
Cash prices dropped about $3, to $103/cwt, this week in the south, according to traders (all figures US$).
Boxed beef prices also eased slightly on Friday, but they have been strong since the fire, prompting packers to slaughter more cattle at other plants to take advantage of soaring profit margins.
Packers slaughtered an estimated 580,000 cattle through Friday this week, up from 577,000 last week, according to U.S. Department of Agriculture data. They are expected to kill about 64,000 cattle on Saturday, down from 77,000 a week earlier but up from 47,000 a year earlier.
“We’ve had really solid slaughter numbers since the Tyson fire,” said Arlan Suderman, chief commodities economist for INTL FCStone.
“The question is, will there be enough labour to sustain that strong Saturday kill rate? The market is skeptical.”
Chicago Mercantile Exchange (CME) October live cattle futures settled 0.875 cent lower at 98.925 cents/lb. December live cattle dropped 0.575 cent to 103.675 cents/lb. and set a contract low of 103.075 cents.
October feeder cattle slid 1.175 cents, to 130.8 cents/lb.
In the hog market, futures ended mixed as traders monitored trade talks with China. Beijing said last week it will impose more tariffs on U.S. agricultural goods including pork, its latest retaliatory measure in their trade war.
Bilateral talks could be complicated by Beijing’s response to widespread protests in Hong Kong, hog traders said.
“This is a market that rises and falls with feelings of, ‘Are we moving with China or not moving with China?'” Suderman said.
China needs to increase pork imports because it is struggling with African swine fever, a hog disease that has killed millions of pigs and pushed Chinese pork prices to record highs.
CME October lean hogs sank 1.375 cents, to 63.525 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.