Chicago | Reuters — U.S. live cattle futures closed lower on Tuesday for a second consecutive session after key contracts reached more-than-four-month highs last week as processors continued to cut into a surplus of market-ready cattle, traders said.
Concerns about a piecemeal economic reopening as coronavirus cases flare up across the United States have traders worried that demand for beef and pork will remain uneven, despite higher volumes of meat processing, said Kirk Dawson, commodity broker at Allendale, Inc.
“They’re nervous about putting a lot of premium in the market because of demand uncertainty,” said Dawson.
Estimates from the U.S. Department of Agriculture (USDA) show 118,000 cattle slaughtered on Tuesday, 2.5 per cent fewer than the same time a year ago.
Chicago Mercantile Exchange (CME) August live cattle futures settled down 0.425 cent at 101.85 cents/lb. and October live cattle fell 0.25 cent to 106.125 cents (all figures US$).
CME August feeder cattle futures settled down 0.275 cents at 141.325 cents/lb.
Beef packer margins remain high, at an estimated $259.95 per head, though they have scaled back compared to early July, when margins topped $300 per head.
“The processors have been doing well, margin wise,” said Dawson. “They haven’t exactly been giving the stuff away.”
Meanwhile, boxed beef prices remained locked in a recent range, with prices for choice cuts of boxed beef on Tuesday afternoon trimming 83 cents to $200.91/cwt and select cuts adding 67 cents to $192.26/cwt, according to USDA.
CME lean hog futures gained Tuesday, with August futures settling up 1.075 cents at 51.475 cents/lb.
USDA estimated 478,000 hogs were slaughtered on Tuesday, up from 476,000 head on the same day a year ago.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.