Chicago | Reuters — U.S. live cattle futures closed lower on Monday, pulling back after a rally last week on signs that meatpackers may be working through backlogs of market-ready cattle, traders said.
Although slaughter rates have returned to pre-coronavirus levels, cattle remain heavier after backing up in feedlots when processing plants closed this spring due to COVID-19 outbreaks among meatpacking workers, said Don Roose, president of U.S. Commodities. The bigger cattle result in more boxed beef, he said.
“The reality is bigger supplies are here still,” Roose said. “Weights are still big in COVID uncertainty, so we pulled back.”
Estimates from the U.S. Department of Agriculture show 117,000 cattle slaughtered on Monday, up 1.7 per cent from the same time a year ago.
Chicago Mercantile Exchange (CME) August live cattle futures settled down one cent at 102.275 cents/lb. and October live cattle fell 0.5 cent to 106.375 cents (all figures US$).
CME August feeder cattle futures settled down 1.1 cents at 141.6 cents/lb.
Boxed beef prices have softened in recent weeks, signaling more supply as slaughter rates improve. But fears of a resurgence of coronavirus outbreaks among consumers dampen traders’ confidence in consistent demand.
Prices for choice cuts of boxed beef on Monday afternoon gained $1.45, to $201.92/cwt, and select cuts added 81 cents, to $191.12/cwt, according to USDA.
CME lean hog futures also fell on Monday after gaining last week. Hogs backed up on farms after disruptions at packing plants in April and May, leading some farmers to euthanize them.
“We never euthanized anywhere close to what the government said we were going to,” said Roose. “We’ve got hogs backed up.”
USDA estimated 477,000 hogs slaughtered on Monday, up 6.5 per cent from a week ago and 1.3 per cent more than a year ago.
CME August lean hog futures settled down 2.4 cents at 50.4 cents/lb.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.