Chicago | Reuters — Chicago Mercantile Exchange live cattle futures dropped sharply on Monday in reaction to a government report that showed larger-than-expected supplies of cattle on feed in the U.S., traders said.
Nearby cattle futures contracts fell more than 1.5 per cent, with selling accelerating as prices breached key technical support levels.
The selling was in response to the U.S. Department of Agriculture’s monthly cattle-on-feed report, which was released after the futures market closed on Friday.
Although analysts polled ahead of the report expected a year-on-year drop in March 1 on-feed supplies and February cattle placements, the report showed an increase in both. Meanwhile, cattle marketings in February were short of expectations.
“There was a bearish reaction to Friday’s cattle on feed report. It sets the stage for a generally higher trend for placements in the next couple of months,” said Rich Nelson, chief strategist with Allendale Inc.
A larger number of animals on this week’s fed cattle showlists added pressure to futures, he said.
CME April live cattle futures ended down 2.15 cents at 127.575 cents/lb. while the actively traded June contract fell 2.375 cents to 121.125 cents (all figures US$).
April feeder cattle futures were 2.6 cents lower at 146.2 cents/lb. and May feeders were down 3.35 cents at 150.7.
Lean hog futures were mixed as traders weighed improving pork exports against a large supply of hogs.
USDA is due to release its quarterly hogs and pigs report on Thursday after its most recent report in December showed a smaller-than-anticipated herd.
Strong pork export prospects have underpinned hog futures in recent months as China, the world’s top pork consumer, is expected to boost purchases of the meat because its domestic hog herd has been decimated by African swine fever.
Optimism for a surge in U.S. pork sales to China propelled hog futures to limit-up gains for two days last week.
CME April lean hogs ended up 0.325 cent on Monday at 78.65 cents/lb. while June hogs fell 0.125 cent to 95.55 cents.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.