Chicago | Reuters — Chicago Mercantile Exchange live cattle futures slumped on Thursday to their lowest level in five years following this week’s weaker cash prices on anticipation of increased supplies over the next few months, traders said.
October live cattle ended down by the three cents/lb. daily price limit, at a new contract low of 103.575 cents (all figures US$). December closed 2.975 cents lower at 105.4 cents and posted a low of 105.375 cents.
CME live cattle futures’ trading limit will be expanded to 4.5 cents on Friday.
This week market-ready, or cash, cattle sold at $110 to $111/cwt, $4-$5 lower than a week ago, said feedlot sources.
“The cattle industry is losing money. And when that happens, you’re a price taker and not a price maker,” said A+A Trading Inc. broker Jim Clarkson.
Packers needed fewer cattle as plants prepared to shut down on Monday for the Labour Day holiday, said traders. They added that wholesale beef demand subsided after most retailers had bought all they needed for upcoming holiday cookouts.
Labour Day meat sales will be crucial on the densely populated East Coast, which is bracing for the possible fallout from Tropical Storm Hermine.
Futures selling intensified after the government’s weekly data showed cattle weights for the week ended Aug. 20 at 829 lbs. per head, up three pounds from the previous week.
Generally cheaper feed prices allowed feedlots and ranchers to fatten cattle more, contributing to already plentiful supplies of protein, said Clarkson.
Thursday’s corn future’s spike and live cattle futures’ selloff sank CME feeder cattle contracts. September ended 3.225 cents/lb. lower at 137.3 cents.
Hog futures up third day
CME lean hogs gained for a third straight day, helped by their discounts to the exchange’s hog index for Aug. 30 at 66.03 cents, traders said.
Some market participants bought hog futures and simultaneously sold live cattle contracts in a trading strategy known as spreading.
October and December finished 0.475 cent/lb. higher at 63.325 and 58 cents, respectively.
Eroding cash prices and uncertainty regarding post-Labour Day wholesale pork movement, due to ample supplies, capped market advances, analysts and traders said.
The government reported that Thursday morning’s average cash hog price in Iowa/Minnesota tumbled $2/cwt from Wednesday to $60.45 in extremely light volume.
The morning’s wholesale pork price rose 48 cents/cwt from Wednesday to $78.48, USDA said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.