Chicago | Reuters — Chicago Mercantile Exchange live cattle futures eased to their lowest level in nine months on Monday as the seasonal supply build-up pressured wholesale beef prices for a third consecutive session, traders said.
They said bullish traders worried that plentiful cattle numbers might again result in lower prices for slaughter-ready, or cash, cattle later this week.
Bargain buyers limited market losses while being drawn to futures that remained bullishly undervalued, or discounted, to last week’s cash prices.
August ended down 0.375 cent/lb. at 106 cents, and October closed down 0.05 cent, to 105.85 cents (all figures US$).
Grocers are buying beef at lower prices knowing more heavyweight cattle are now being processed, which tends to add more tonnage to the retail sector, a trader said.
“Packers are in a tough spot because they have to clear as much beef from their coolers as possible to make way for fresh meat,” he said.
Last week cash cattle in the U.S. Plains brought $109-$110/cwt versus $114 to $116 a week earlier.
Market participants await Wednesday’s Fed Cattle Exchange (FCE) sale of 1,067 animals. No cattle changed hands last week due to sufficient supplies and packer inventories.
On Tuesday the U.S. Department of Agriculture will issue the monthly cold storage report at 2 p.m. CT that will include total July beef and pork inventories.
Two analysts surveyed by Reuters, on average, projected last month’s total beef stocks at 416.1 million lbs. and 561.4 million for pork.
Sell stops and weaker live cattle futures weighed on CME feeder cattle contracts.
August feeders closed 0.7 cent/lb. lower at 139.8 cents.
Hogs repeat four-month low
Expectations for lower cash and wholesale pork prices, as supplies grow seasonally, sank CME lean hogs to a four-month low for a second straight session, said traders.
October ended 1.45 cents/lb. lower at 64.675 cents, and December finished down 1.475 cents at 59.85 cents.
Besides already abundant supplies, packers will not need as many hogs as the Sept. 4 Labour Day holiday approaches, a trader said.
He said pork belly prices, part of overall wholesale pork values, have peaked seasonally ahead of Labour Day — the unofficial end of the summer bacon-lettuce-tomato sandwich season.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged cattle futures, closing markets, CME, cold storage, FCE, Fed Cattle Exchange, feeder cattle, hog futures, lean hogs, live cattle, USDA