Chicago | Reuters—Chicago Mercantile Exchange live cattle and feeder cattle futures plunged on Thursday in a setback from record highs.
Fund selling and profit taking dragged down prices that have surged this year as U.S. cattle supplies dwindled to their lowest levels in decades, traders said.
Ranchers slashed their herds in recent years after a severe drought dried up pastures used for gazing, driving feeding costs higher. Beef production has declined as a result, and prices have climbed in a blow to consumers.
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U.S. livestock: Tight cattle supply helps CME futures rebound from collapse
Chicago Mercantile Exchange live cattle and feeder cattle futures rebounded on Friday from a steep drop during the previous session.
Some traders wondered whether futures had topped out following Thursday’s plunge but said the markets have a recent pattern of recovering from setbacks.
“Cattle make new all-time highs, and then we back off,” one broker said. “It won’t go up forever.”
August live cattle futures LCQ25 sank 5.3 cents to end at 227.775 cents per pound after hitting a contract high of 233.750 cents a day earlier. Wednesday’s peak was the highest-ever price on a continuous chart LCc1 of the front cattle futures contract.
Most-active October live cattle LCV25 ended down 6.575 cents at 223.15 cents after reaching a contract high of 230.425 cents on Wednesday.
The market was technically overbought, traders said.
In feeder cattle, September futures FCU25 slid 8.2 cents to close at 331.550 cents per pound after reaching a new high of 341.050 cents.
Front-month August feeders FCQ25 set the highest-ever price on a continuous chart FCc1 of the nearby futures contract at 340.625 cents.
The U.S. Department of Agriculture on Friday confirmed the U.S. cattle herd dropped to 94.2 million head by July 1, a record low for that date, while the number of cattle placed in U.S. feedlots during June fell by 8% compared to a year earlier, a bigger-than-expected drop.
Consumer demand for beef has been generally strong despite high prices. Still, wholesale boxed beef values have eased recently, with choice cuts slipping $0.67 to $361.32 per hundredweight (cwt) on Thursday, according to the USDA.
In the pork market, CME August lean hog futures LHQ25 ended up 0.100 cent at 107.125 cents per pound. October hogs LHV25 rose 0.375 cent to 89.575 cents per pound.
