U.S. livestock: CME live cattle futures plunge to five-year low on supply worries

(Photo courtesy Canada Beef Inc.)

Chicago / Reuters – Chicago Mercantile Exchange live cattle futures on Thursday slumped to a five-year low in anticipation of increased supplies that could further pressure wholesale beef prices, traders said.

August live cattle ended 1.900 cents per lb lower at 107.525 cents, and October closed 2.375 cents lower at 105.700 cents.

Affordable grain reduced cattle input costs which translates into plenty of beef, along with pork and chicken, and much more than a year ago, said A&A Trading broker Jim Clarkson.

Despite highly profitable margins, packers in recent weeks paid less for cattle given the bearish futures market tone and summer seasonal slowdown in meat demand.

Some Plains ranchers rushed cattle to market ahead of schedule, worried that Midwest forecasts for extreme heat over the next few days might cause stress and even death to livestock.

So far this week, packers in the southern U.S. Plains paid $115 to $116 per cwt for market-ready, or cash, cattle that last week brought $117, feedlot sources said.

The morning’s choice beef price sagged 68 cents per cwt from Wednesday to $200.63. Select cuts fell 87 cents to $190.14, the U.S. Department of Agriculture said.

Average beef packer margins for Thursday were a positive $17.75 per head, down from a positive $22.60 on Wednesday but up from a positive $15.95 a week ago, as calculated by HedgersEdge.com.

“Packers are making a ton of money and got the cattle feeder between a rock and a hard place. He can’t not sell cattle because he’s got to keep cash flow and this heat adds to that,” said Clarkson.

Investors await USDA’s monthly Cattle-On-Feed on Friday.

CME feeder cattle futures almost posted a two-year low following heavy live cattle futures losses. August feeders closed 4.225 cents per lb lower at 134.400 cents.

Hog futures end lower

Fallen cash and wholesale pork prices sent CME lean hogs to their lowest since April 26, traders said.

August hogs finished 1.750 cents per lb lower at 74.450 cents, and October ended down 1.600 cents to 62.275 cents.

Cash hog prices in the Midwest on Thursday morning were 50 cents to $1 per cwt lower on ample supplies, said Midwest hog merchants.

Thursday morning’s wholesale pork price, or cutout, declined 67 cents per cwt from Wednesday to $88.89, the USDA said.

“Once the cutout started acting weak, I think people started running for the hills,” said James Burns, president of JBS Trading Co.

Editing by James Dalgleish

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