Chicago | Reuters — Chicago Mercantile Exchange live cattle futures hit a two-month low on Monday and the benchmark December lean hogs contract hit an eight-month low as worries about the U.S. and world economy triggered a round of long liquidation, analysts said.
“This market is looking for positive news, and not finding a lot. And with all the turbulence out there, and the Dow continuing to go down every single day, there seems to be significant long liquidation,” said Altin Kalo, economist at Steiner Consulting Group.
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Traders fear that a recession will reduce demand for goods including beef and pork. Commodity funds hold a net long position in live cattle and lean hog futures, leaving both markets prone to long liquidation.
CME October live cattle settled down 0.775 cent at 143.475 cents/lb. and the most-active December contract fell 1.2 cents to finish at 147.35 cents/lb. after dipping to 146.575 cents, the contract’s lowest since July 22 (all figures US$).
CME November feeder cattle settled down 1.2 cents at 177.05 cents/lb. after touching 176.025, its lowest since June 13.
A brisk cattle slaughter pace in recent weeks has added to the negative tone, pressuring wholesale beef prices. Choice cuts of beef were priced at $247.84 per hundredweight (cwt) on Monday afternoon, according to the U.S. Department of Agriculture (USDA), the lowest since March 2021.
“The last four weeks, we’ve been running the fed cattle slaughter almost 4% higher than a year ago. So that is bringing a fair amount of product to the market at a time when demand is not that great. You’ve just come out of grilling season,” Kalo said.
For hogs, CME October lean hogs ended down 2.25 cents at 90.375 cents/lb. and benchmark December hogs tumbled 3.4 cents to finish at 79.4 cents/lb. after hitting 78.4 cents, the contract’s lowest since Jan. 27.
Traders await the U.S. Department of Agriculture’s Sept. 29 quarterly hogs and pigs report.
After Friday’s close, USDA reported the number of U.S. cattle on feed as of Sept. 1 at 11.279 million head, about 100 per cent of the year-ago total and in line with analyst expectations.
Cattle marketings during August were 106 per cent of a year ago, in line with trade estimates, while August placements were 100 per cent of a year ago, above the average analyst estimate of 97.3 per cent.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
