Chicago | Reuters — U.S. live cattle futures closed lower on Wednesday as uncertainty about demand lingers, while dry conditions in the U.S. West have analysts worried about an influx of market-ready cattle in the coming weeks.
“You look at pasture range and it is deteriorating very quickly,” said Ted Seifried, chief ag market strategist at Zaner Group.
Seifried said given the option to spend more on grain feed or sell to packers early, producers may opt for the less cost-intensive option.
“I think you’ll have a lot of cattle coming to market over the next couple weeks,” he said.
Chicago Mercantile Exchange (CME) August live cattle futures settled down 0.35 cent at 101.5 cents/lb. and October live cattle fell 0.4 cent to 105.725 cents (all figures US$).
CME August feeder cattle futures settled up 0.2 cent at 141.525 cents/lb.
Meanwhile, hog slaughter has increased, but analysts worry consumer demand may lag as packers rush to reduce backlogs of market-ready hogs.
“There’s a glut of hogs coming on the market here. China’s hog population has built back up again,” said Dan Smith, commodity broker with Top Third Ag Marketing. “I think we’re going to have a hard hill to climb here.”
The U.S. has exported nearly 502,000 tonnes of pork to China since January, up 271 per cent from last year, according to USDA data. But there are signs exports are slowing. In June, average weekly export shipments were down more than 33 per cent from recent highs in April 2020.
Traders are monitoring rising tensions with China after the U.S. ordered the closure of the country’s consulate in Houston, escalating diplomatic tensions and threatening future purchases.
CME lean hog futures gained Tuesday, with August futures settling up 1.175 cents at 52.65 cents/lb. October futures added 0.05 cent to 50.075 cents/lb.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.