U.S. livestock: CME cattle up off last week’s sell-off

Chicago | Reuters — Chicago Mercantile Exchange live cattle and feeder futures advanced on Monday in a rebound from recent declines to multi-month lows.

Short-covering helped boost the markets, as losses driven by fund liquidation and technical selling last week were overdone, brokers said.

The U.S. beef industry still faces tight supplies of cattle, after years of drought drove ranchers to reduce the size of the nation’s herd to the lowest in decades in 2023.

“We got pretty deeply oversold,” said Matt Wiegand, broker for FuturesOne.

CME December live cattle futures settled up 0.75 cent at 174.925 cents/lb., after dropping on Friday to the lowest price since May 26 (all figures US$). February 2024 live cattle rose 0.6 cent, to 175.25 cents/lb., after falling on Friday to the lowest price since May 12.

In the feeder cattle market, January 2024 futures jumped 1.875 cents to 228.3 cents/lb., after sinking on Friday to the lowest price since April 5.

Corn futures also rose on Monday, and higher grain prices often pressure feeder cattle by signaling risks for increased costs for livestock feed.

“The feeder cattle holding strength with corn up a dime is a pretty good sign that we exhausted the downside move,” Wiegand said.

U.S. meat company Tyson Foods projected in a quarterly earnings report that tight cattle supplies will lead its beef business to an adjusted operating loss of between $400 million and breakeven in its fiscal year 2024, which started on Oct. 1.

The sector will continue to face challenges until producers start to retain heifers to rebuild herds, and it is unclear when that will begin, Tyson chief financial officer John R. Tyson said in an interview.

The meatpacker said beef sales volumes fell by 6.7 per cent in the quarter ended Sept. 30, while average prices climbed 10.2 per cent. Its pork sales volumes slumped 0.2 per cent as prices dropped 6.7 per cent.

At the CME, December lean hog futures settled 1.45 cents higher at 73.35 cents/lb.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.