Chicago | Reuters—Chicago Mercantile Exchange (CME) feeder cattle futures turned lower and live cattle were mixed on Friday, as traders squared positions ahead of a closely-watched monthly feedlot report and anticipated smaller cattle placements, traders said.
But after markets closed, the U.S. Department of Agriculture reported much larger cattle placements than the trade had expected, news that could set the stage for volatile trading on Monday, market analysts said.
USDA reported placements of cattle into U.S. feedlots during May at 2.05 million head, up four per cent from a year ago, while analysts surveyed by Reuters on average had expected a 1.5 per cent decline.
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The total number of U.S. cattle on feed as of June 1 was 11.58 million head, just slightly below the same period a year earlier, while analysts on average had expected a one per cent decrease.
Earlier in the session, USDA reported net export weekly sales of U.S. beef were up 24 per cent from the previous week – but down seven per cent from the prior four-week average.
The larger-than-expected number of cattle placed into feedlots comes as packers have set a sluggish slaughter pace as they try to preserve profit margins and sellers have shown less urgency to liquidate their herds, market analysts said.
That pace is expected to pick up as summer temperatures rise, as heavy animal weights may push more producers to accelerate marketing to avoid deaths from heat stress, traders said.
Prices in the cash cattle market this week were steady to higher, traders said, with some trades in Iowa in the $192 to $197 per hundredweight (cwt) range.
Lean hog futures were mixed on Friday on a technical bounce, with nearby contracts firming, as the latest government data on U.S. pork exports showed a drop in demand, market analysts said.
CME July hogs LHN24 closed 0.900 cent higher, at 92.050 cents per pound.
CME August live cattle LCQ24 settled 0.600 cent higher, at 183.150 cents per pound. CME August feeder cattle FCQ24 ended down 1.450 cent, to end at 258.375 cents per pound.
