Chicago | Reuters — Chicago Mercantile Exchange live cattle futures fell on Tuesday, extending their slide to four straight sessions on declining cash prices and expectations of rising cattle supplies in the next few months.
Cash cattle traded lightly in Texas and Kansas, down $1 from last week’s trade, brokers said (all figures US$).
“We are preparing for an ugly second quarter,” said Rich Nelson, chief strategist for Allendale Inc., adding, “We are preparing for huge supplies. Cash is ready to start breaking.”
The U.S. Department of Agriculture’s latest monthly Cattle on Feed report indicated larger supplies of cattle in the offing. And ahead of the next Cattle on Feed report, due Friday, analysts on average expected the government to report February cattle placements up 4.2 per cent from a year ago.
April live cattle closed 0.65 cent/lb. lower at 119.575 cents, after dipping to 119.325, the contract’s lowest level since Jan. 12. June live cattle ended down 1.15 cents at 109 cents.
CME feeder cattle futures followed live cattle lower. April feeders ended down 0.75 cent/lb. at 137.45 cents.
Front-month March ended down 0.675 cent/lb. at 137.775 cents after dipping to 137.35, the lowest spot price on a continuous chart since April 19.
“It’s good we’ve been hit on the feeder price. I am not sure if it’s enough. This is going be a bloodbath on cattle feeder profitability up ahead,” Nelson said.
Contract lows in lean hogs
CME April and May lean hogs fell to life-of-contract lows on ample pork supplies and lacklustre demand, although the spot April contract eked out a higher close.
April hogs settled up 0.1 cent/lb. at 63.25 cents, after posting a contract low at 62.825. May hogs finished down 0.425 cent/lb. at 70.2 cents.
— Reporting for Reuters by Julie Ingwersen and Theopolis Waters.