Chicago | Reuters — Cattle futures sank to their lowest levels in nearly eight months at the Chicago Mercantile Exchange on Friday on increased concerns about easing demand for U.S. beef.
Technical selling accelerated the slide after funds recently liquidated long positions, traders said.
“We don’t know what demand is going to be a year from now,” said Arlan Suderman, chief commodities economist for broker StoneX. “The funds don’t want to take that risk holding those positions until we find out.”
CME February 2024 live cattle futures tumbled 4.3 cents to settle at 170.975 cents/lb. January 2024 feeder cattle plunged 7.8 cents to end at 219.325 cents/lb. Both contracts set their lowest prices since March 27.
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The markets came under pressure after the U.S. Department of Agriculture (USDA), in a report issued after trading ended on Wednesday, said total pounds of beef in U.S. freezers as of Oct. 31 were up 5.6 per cent from the previous month. The CME was closed on Thursday for U.S. Thanksgiving.
October beef inventories have increased an average of 2.5 per cent in the last five years, according to Steiner Consulting Group. The larger-than-normal increase last month suggests a slowdown in beef sales is leaving more in cold storage, analysts said.
U.S. export demand has declined this year due to strength in the dollar and as beef prices have climbed due to limited cattle supplies. Beef export sales in the week ended Nov. 16 were 10,000 metric tonnes for 2023, down 30 per cent from the prior four-week average, USDA said on Friday.
At the same time, expectations for supplies in early 2024 have increased after USDA said in some recent monthly reports that producers placed more cattle in feedlots than a year earlier. Supplies are expected to be tighter toward the end of next year.
In CME’s lean hogs market, February futures set a contract low of 68.2 cents/lb. before ending down 3.05 cents at 68.775 cents/lb.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.
