Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed sharply lower on Friday as global economic turmoil sparked fears of a U.S. meat export slowdown, traders and analysts said.
Spot-August futures closed 1.05 cents/lb. lower at 145.425 cents, and October 2.475 cents lower at 143.85 cents (all figures US$).
“The elephant in the room is the outside equity markets. When beef is high compared to the other meats, the first thing you have to think about is demand,” said U.S. Commodities analyst Don Roose.
Friday morning’s wholesale choice beef price (cutout) slumped $1.69/cwt from Thursday, to $244.77. Select cuts shed 76 cents, to $234.82, the U.S. Department of Agriculture said.
The beef cutout pullback and futures’ steep drop weighed on prices for unsold market-ready (cash) cattle.
Friday morning, cash cattle in Kansas sold lightly at $147/cwt, $3 lower than a week ago, feedlot sources said. Texas cash bids held at $148 against $150 asking prices, they said.
Earlier this week, cattle in Nebraska fetched $145-$149, down as much as $6 lower form last week there.
Would-be futures buyers watched from the sidelines while waiting for Friday’s USDA monthly Cattle-On-Feed report at 2 p.m. CT.
Simultaneously, the government will issue its monthly cold storage report, which will include July beef and pork inventories.
A few analysts, on average, estimated last month’s cold storage total beef stocks at 464.5 million lbs., and pork at 613.4 million lbs.
Fallen live cattle futures sank most of CME’s feeder cattle contracts by their 4.5-cents/lb. price limit.
August, which will expire on Aug. 27, ended 1.2 cents/lb. lower at 212 cents. September and October closed limit down at 202.325 and 199.475 cents, respectively.
CME feeder cattle trading limits will be expanded to 6.75 cents on Monday following Friday’s limit-down settlement.
Cash prices undercut hog futures
Lower cash prices and outside-market angst wore down CME lean hogs, traders said.
The spot-October contract closed down 1.925 cents/lb., to 62.825 cents, and December 2.3 cents lower at 59 cents.
USDA reported the morning’s western Midwest average cash hog price at $71.11/cwt in light volume, $4.30 lower than on Thursday.
Hog prices typically come down this time of year as cooler weather promotes animal weight gain, a trader said.
Futures were further pressured by technical selling and neighbouring cattle market losses, he said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.