Chicago | Reuters — Chicago Mercantile Exchange feeder cattle futures posted solid gains on Monday, on weakness in the corn market and amid market signals that feed lots may be interested in holding their herds back from slaughter, traders said.
Meanwhile, live cattle futures and lean hogs finished the day lower to mixed amid questions of whether domestic consumer demand for beef or pork will wane during the Lent season when some Christians opt not to eat red meat on Fridays.
“From the latter half of February and into March, you’ll typically see beef and pork consumer demand start to go down,” said Dan Norcini, an independent livestock trader.
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“The trade is starting to factor in the question of whether we are going to see this happen this year, too.”
The pace of cattle slaughter continued to slow on Monday. Packers slaughtered 115,000 head of cattle – down from 125,000 head a week earlier and down from 123,534 head a year ago, according to U.S. Department of Agriculture data.
The slowing pace may be a reflection of beef packer margins slumping even further into the red, Norcini said. When margins turn negative for too long, and if demand is softening, beef packers tend to slow down their plants’ line speeds he added.
“The theory is that by slowing the line speed, you kill less cattle and you put less meat in the supply chain,” Norcini said. “If there’s less beef in the pipeline, the wholesale prices tend to go up – and the packers also don’t have to buy as many cattle.”
April live cattle LCJ24 settled down 0.800 cent at 185.925 cents per pound. March feeder cattle FCH24 settled up 1.675 cents at 248.825 cents per pound.
CME benchmark April lean hog futures LHJ24 settled down 0.025-cent at 81.125 cents per pound.
