Chicago | Reuters—Chicago Mercantile Exchange live cattle and feeder cattle futures rebounded on Friday from a steep drop during the previous session.
Tight U.S. inventories and strong demand for beef continued to support the markets, after month-end fund selling and profit taking drove prices lower on Thursday, brokers said. Thursday’s setback followed rallies to record highs this week.
Ranchers this summer slashed the nation’s cattle inventory to its lowest level since records began in 1973. A severe drought in recent years dried up pastures used for grazing, raising feeding costs, prompting ranchers to reduce their herds, and pushing beef prices to records.
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“I really don’t think there was much of a fundamental reason for futures to collapse yesterday,” said Austin Schroeder, commodity analyst for Brugler Marketing & Management. “A lot of it was just money flow.”
August live cattle futures LCQ25 jumped 2.350 cents to end at 230.125 cents per pound on Friday and increased 1.6 per cent for the week.
Before tumbling on Thursday, the contract reached a high of 233.750 cents on Wednesday. That was the highest-ever price on a continuous chart LCc1 of the front cattle futures contract.
Most-active October live cattle LCV25 ended up 0.525 cent at 223.675 cents on Friday, after reaching a contract high of 230.425 cents on Wednesday. For the week, the contract edged up 0.2 per cent.
The U.S. Department of Agriculture last week confirmed the cattle herd dropped to 94.2 million head by July 1, a record low for that date, while the number of cattle placed in U.S. feedlots during June fell by eight per cent compared to a year earlier, a bigger-than-expected drop.
CME September feeder futures FCU25 advanced 2.375 cents to end at 333.925 cents per pound on Friday after setting a high of 341.050 cents on Thursday. For the week, the contract rose 0.5 per cent.
Livestock traders assessed new U.S. tariffs on dozens of trading partners amid concerns about potential damage to American agricultural exports.
CME August lean hog futures LHQ25 closed up 0.225 cent at 107.35 cents per pound while October hogs LHV25 rose 0.475 cent to 90.050 cents per pound.
