Slumping beef demand weakens U.S. live cattle futures

Chicago Mercantile Exchange (CME) live cattle futures posted modest losses on Friday with lower wholesale beef prices, traders and analysts said.

August live cattle closed down 0.075 cent per pound, to 121.85 cents. October ended at 126.075 cents, or 0.35 cent lower (all figures US$).

The U.S. Department of Agriculture’s Friday afternoon data showed the wholesale price of choice beef at $191.53 per hundredweight (cwt), $1.19 lower than on Thursday. Select cuts slid $1.04 to $183.67.

Extreme heat and high humidity in parts of the U.S. curbed beef demand for outdoor cookouts. And uncertainty about this week’s cash cattle prices sidelined futures’ buyers.

Bullish traders expect cattle to trade steady with $119 to $120.50/cwt last week based on fewer animals for sale.

Market bears see sluggish beef demand pressuring cash prices while forcing packers to cut slaughter rates.

Investors are keeping a close eye on rising temperatures in the central Plains. Extreme heat and humidity could stress cattle and in some cases cause animal deaths.

Temperatures this week topped 100 F from areas of Texas to as far north as southern Nebraska, said Hales Trading Co. president David Hales.

“Humidity has kept heat stress to a minimum. But any increase in humidity will tend to push cattle feeders into selling cattle more aggressively,” he said.

CME feeder cattle closed steady to firm as corn prices drifted downward. Cheaper corn may increase feedlot demand for younger cattle.

August CME feeder cattle closed unchanged at 150.125 cents/lb. September finished up 0.175 cent to 152.725 cents and October ended at 154.45 cents, or 0.275 cent higher.

Hogs slip on cash

Morning cash hog pork price declines stirred CME hog futures selling, analysts and traders said.

But, afternoon cash market rebound and wholesale pork price gains may encourage futures buyers on Monday, they said.

Friday afternoon’s average hog price in the most-watched Iowa/Minnesota market was $97.80 per cwt. The price jumped $2.55 after dropping 56 cents that morning, according to USDA data.

The government’s Friday afternoon mandatory wholesale pork price, or cutout, was $101.48/cwt, up 73 cents from Thursday.

A few packers bought hogs for early next week’s production schedule. Higher ham and rib prices underpinned the cutout.

“I have a hard time selling futures. There have been too many times I’ve seen them go down only to come roaring back,” said independent hog futures trader James Burns.

Funds sold the August contract and bought deferred months guided by the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).

Funds that follow the S+PGSCI shifted their CME hog and live cattle August long positions mainly into October. Friday was the last official day for the process.

Spot July hogs, which will expire on Monday, closed down 0.075 cent/lb. to 102.1 cents.

Most-actively traded August finished 0.375 cent lower to 94.9 cents, and October ended at 84.2 cents, or up 0.05 cent.

— Theopolis Waters reports for Reuters from Chicago.

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