Chicago | Reuters – Live cattle futures on the Chicago Mercantile Exchange Group fell on Tuesday for a fourth session on profit-taking after last week’s contract highs, and a month-long slide in wholesale beef prices that erased meat packers’ profit margins, analysts said.
CME August live cattle futures LCQ3 settled Tuesday down 0.450 cent at 178.300 cents per pound and most-active October LCV3 fell 0.700 cents to 179.600 cents per pound.
CME August feeder cattle FCQ3 futures ended down 0.025 cent at 243.225 cents per pound.
Read Also
Alberta crop conditions improve: report
Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.
Meat packers were losing an estimated $74.40 per head of cattle, as of Tuesday, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC. Margins on cattle have been in negative territory since mid-July. LIV/H
However, beef prices have inched higher in recent days and may have bottomed for the time being, while a shrinking U.S. cattle herd continues to underpin the market.
The USDA priced choice cuts of beef BEEF-US-CH in Tuesday’s cutout report at $304.22 per hundredweight (cwt), up 6 cents from Monday, while select cuts rose 56 cents to $277.55 per cwt.
“Cattle supplies are tight and they are not going to get better any time soon, so once we see cutouts begin to bounce, I think we will see cash (cattle) prices pick back up,” said Sterling Smith, director of agricultural research at AgriSompo North America.
Lean hog futures closed higher as soaring prices for pork bellies, used to make bacon, have helped buoy cash hog prices.
CME October lean hog futures LHV3 settled up 1.725 cents at 84.375 cents per pound.
“It’s all about the pork bellies,” Smith said, noting that wholesale belly prices topped $210 per cwt, more than doubling since mid-June, according to USDA data. Belly prices typically climb in July as garden tomatoes ripen, bolstering consumer demand for bacon-lettuce-tomato sandwiches.
“That tends to drive up bacon demand, particularly in mid to late summer. This pop has allowed cash hog prices to move up,” Smith said.
The USDA priced wholesale bellies on Monday at $225.17 per cwt, their highest since Aug. 2, 2022, but values retreated late Tuesday, falling to $210.79.
