Chicago | Reuters — U.S. live cattle futures closed lower on Monday, with some contract months falling their daily three-cent limit on profit-taking amid signs the U.S. meat-packing sector was stepping up beef production, traders said.
Chicago Mercantile Exchange (CME) June live cattle futures settled down 1.975 cents at 92.675 cents/lb., after surging to a six-week high on Friday (all figures US$).
The August and October live cattle contracts fell the daily three-cent limit, and limits will widen to 4.5 cents for Tuesday’s session, the exchange said.
August feeder cattle futures fell 4.275 cents to 132.675 cents/lb.
“The plants are coming back online, so beef supplies are going to start to increase. Therefore beef prices are going to start to decrease, so it’s time to take your money and run,” said Alan Brugler, president of Nebraska-based Brugler Marketing and Management.
The U.S. Agriculture Department on Friday said 14 meat plants that had closed due to labour shortages amid COVID-19 outbreaks were in the process of reopening last week.
USDA estimated Monday’s cattle slaughter at 86,000 head, matching Thursday’s tally as the largest kill since April 20, while Monday’s hog slaughter reached 357,000 head, a two-week high.
The increased slaughter pace should ease a backlog of animals, although it could also help lift cash cattle prices, Brugler noted.
Wholesale beef prices remained historically high, however. The choice boxed beef cutout rose to $467.81/cwt, up $6.93 from Friday and up nearly $58 from a week ago, according to USDA. Retailers such as Kroger and Costco have limited sales of some meat items, and margins for beef processors have climbed.
CME lean hog futures also declined on Monday, with the June contract settling down 1.425 cents at 60.275 cents/lb.
Traders await Tuesday’s monthly USDA supply/demand reports in which the government might revise its estimates for quarterly U.S. beef and pork production.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.