Chicago | Reuters –– U.S. live cattle futures fell to 1-1/2-month lows and feeder cattle declined by nearly three per cent on Tuesday in a technical selloff triggered by ample supplies and lower beef prices, traders and analysts said.
Live cattle eased their third straight session, briefly falling by the daily limit of three cents/lb. before trimming losses. Cool weather in parts of the U.S. has kept a lid on seasonal beef demand associated with grilling season.
“We have demand for grilling that’s out there, but we haven’t gotten there yet,” said CHS Hedging analyst Steve Wagner. “Packers have been struggling with (profit) margins.”
Larger losses in beef prices than cattle prices have pushed packer margins deep into negative territory, making the packers reluctant to boost bids for cattle in cash markets. Traders said cattle were likely to trade at similar levels to the $133/cwt fetched last week in the southern Plains (all figures US$).
Most-active June live cattle settled 2.925 cents lower at 120.75 cents/lb., lowest since Feb. 16. May feeder cattle finished down the daily price limit 4.5 cents at 150.2 cents/lb.
Feeders had jumped by their daily price limit on Thursday, when the U.S. Department of Agriculture’s prediction for increased U.S. corn sowings sent prices for the most widely used feed in cattle to their lowest in 9-1/2 months.
However, corn has rebounded a portion of its losses last week, weighing on feeder prices that typically move in the opposite direction of corn.
“The fundamentals are very bearish in cattle. We have animal weights 25 lbs. over last year and more cattle on feed,” said Ted Seifried, analyst at the Zaner Group.
USDA at midday said wholesale beef prices declined to $217.30/cwt, lowest in a month, before rising slightly after the close of futures trading to $217.70.
USDA said wholesale pork prices were up $1.07, to $77.60/cwt.
Lean hog futures were narrowly mixed, with front-month April easing 0.3 cent to 67.375 cents/lb. and most-active June up 0.275 cent, to 79 cents.
— Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago.