U.S. livestock: Cattle futures sag on fears for economy, beef demand

Firm cash hog values support hog futures

CME December 2020 live cattle with Bollinger (20,2) bands. (Barchart)

Chicago | Reuters — Live cattle futures on the Chicago Mercantile Exchange eased on Friday, following as global financial markets fell after U.S. President Donald Trump tested positive for the coronavirus, adding to investor uncertainty.

Disappointing U.S. job growth numbers heightened worries about consumer demand for beef, at a time when retailers are starting to stock meat cases for the end-year holidays. U.S. nonfarm payrolls increased by 661,000 jobs last month, below consensus expectations of 850,000.

“I think a lot of today was nervousness over the economy and COVID,” said Doug Houghton, analyst at Brock Capital Management, referring to declines in cattle futures.

CME October live cattle settled down 0.35 cent at 108.175 cents/lb. and most-active December ended down 0.725 cent at 111.1 cents (all figures US$).

However, cattle futures had underlying support from firm cash markets. Fat cattle traded in the U.S. Plains this week at $107/cwt, up about $2 from last week.

Feeder cattle futures fell for a third straight session on rising prices for corn, the main cattle feed grain, after the U.S. Department of Agriculture on Wednesday reported tighter-than-expected Sept. 1 corn supplies.

CME November feeder cattle ended Friday down 1.375 cents at 139.875 cents/lb.

Lean hog futures closed mixed, with the nearby October contract supported by strong demand for pork and firm cash hog markets.

CME October lean hogs settled up 0.35 cent at 74.5 cents/lb., while most-active December hogs ended down 0.35 cent at 62.5 cents.

The CME’s lean hog index, a two-day weighted average of cash markets, climbed to $76.74/cwt, its highest since August 2019. The U.S. pork cutout, an indication of wholesale pork prices, was down $3.50 at $92.15/cwt on Friday afternoon, but up from $74.54 at the start of September.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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