Chicago | Reuters — U.S. live cattle futures declined more than two per cent on Tuesday, nearing their lowest levels in six years on pressure from big supplies of cattle and beef and lower wholesale meat prices, traders said.
Cattle broke below the psychological threshold of 100 cents/lb. for the first time since November 2010 following steep drops in boxed beef prices, which sank to the lowest since December 2015, according to U.S. Department of Agriculture data (all figures US$).
Feeder cattle futures and lean hogs each eased as much as three per cent at the Chicago Mercantile Exchange, with investors selling all three classes of livestock futures on signs consumer demand was outpaced by supply.
“It’s all falling apart,” said Tim Hackbarth, analyst at brokerage the Zaner Group in Chicago. “Technically oversold or not, (live cattle) probably have a little work to do to the downside.”
Live cattle for October delivery finished 1.575 cents lower at 100.025 cents/lb., easing for the fourth straight session. The contract touched a lifetime low of 99.375 cents/lb., before recouping losses on light short-covering.
Choice-grade beef declined 81 cents, to $190.28/cwt, while wholesale pork prices edged up $2.52, to $80.13/cwt, USDA said after the close of futures trading.
Beef has struggled at the retail level. Prices are lower than a year ago, but steaks and hamburgers have lost market share to poultry in recent years while U.S. pork production is expected to be record-large this year.
“There’s still a ton of competition from cheaper protein, and that’s not going away any time soon,” Hackbarth said of beef.
CME October feeder cattle futures finished 3.875 cents lower at 128.2 cents/lb., above their lifetime low of 127.575 reached earlier on Tuesday.
CME October lean hog futures were down 1.825 cents at 58.925 cents/lb., the lowest since Aug. 25 and near their contract low of 57.575 reached a month ago.
Hogs were further pressured by a fire at a Smithfield Foods slaughterhouse late on Monday in Monmouth, Illinois. An extended closure at the plant that can process more than 10,000 hogs per day would reduce local demand and weigh on prices, dealers said.
— Michael Hirtzer reports on agricultural commodity markets for Reuters from Chicago.