Chicago | Reuters — Chicago Mercantile Exchange live cattle futures rallied to contract highs on Tuesday but ended mixed, with nearby contracts pressured by ideas that beef prices are topping out after a surge to nearly 15-month highs, traders said.
Deferred live cattle contracts, however, were higher on the day on concerns about tight cattle supplies in the months ahead as high feed grain costs may have prompted producers to cull herds.
Beef prices eased, ending a steady five-week climb to the highest point since May 2020 as retailers stocked up for end-of-summer outdoor grilling features. Beef prices normally top out just ahead of the Labour Day holiday in early September.
“What you’re seeing is the anticipation of a near-term top in wholesale beef prices as we go past the Labour Day holiday,” said independent livestock trader Dan Norcini.
“If we’re seeing the end of this run in beef prices, it takes away the incentive for packers to put that higher cash on the table,” he said.
The wholesale choice boxed beef price dipped 45 cents on Tuesday to $347.58/cwt while select cuts dropped $2.50 to $316.90/cwt, U.S. Department of Agriculture (USDA) data showed (all figures US$).
Benchmark CME October live cattle rose to a contract high of 132.85 cents/lb. but settled down 0.25 cent at 131.7 cents/lb. All contracts posted fresh life-of-contract highs.
October feeder cattle futures ended 0.45 cent lower at 170.225 cents/lb. as corn prices rose on Tuesday.
CME lean hog futures declined on forecasts for a larger hog supply and seasonally slowing pork demand.
Bull spreading underpinned nearby months, and losses in spot October futures were tempered by the contract’s large discount to cash hog prices, traders said.
October hogs settled down 0.5 cent at 86.975 cents/lb.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.