U.S. livestock: Cattle futures sink as on-feed supply tops estimates

Profit-taking drags on hogs

CME August 2021 live cattle (candlesticks) with 20-day moving average (red line) and July 2021 lean hogs (pink open/high/low/close). (Barchart)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures retreated on Monday after U.S. government data showed supplies in feedlots above trade expectations and as some traders worried about demand for beef.

The U.S. Department of Agriculture (USDA) said late on Friday that May 1 on-feed cattle supplies stood at 105 per cent of a year earlier, the second-highest ever for that date and above forecasts for 103.9 per cent. Cattle placements during April also topped market expectations.

The report reflected changes from an uncertain market last spring at the start of the coronavirus pandemic, when restrictions on travel and gatherings and virus outbreaks at packing plants severely disrupted the supply chain.

“I don’t want to call it a bearish report, but it didn’t do anything to soothe the nerves of the bears,” said Mike Zuzolo, president of Global Commodity Analytics.

Cattle were also pressured by concerns about beef demand heading into the summer grilling season. A weekly USDA report on Friday showed retailers were featuring less beef in advertisements heading into the U.S. Memorial Day holiday weekend compared with a year ago.

“USDA’s weekly retail report on the beef looked pretty dismal. We’re just not getting the featuring we need heading into the first big summer grilling season weekend of the year,” Zuzolo said.

CME August live cattle futures fell 0.825 cent to 120.1 cents/lb. (all figures US$). August feeder cattle futures gained 0.425 cent to 154.2 cents/lb.

Lean hog futures were mostly lower on Monday, pressured by profit-taking and technical selling after rising last week to the highest in nearly seven years.

CME June hog futures fell 0.875 cent to 113.35 cents/lb. after hitting the highest for a front-month contract on Friday since August 2014. Actively traded July hogs settled down 1.225 cents at 115.325 cents/lb.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.



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