Chicago | Reuters — U.S. live cattle futures closed modestly higher on Monday, shaking off early declines and firming on technical buying ahead the end of the month and quarter, after a three-session slide last week, traders said.
A firmer close in Wall Street equity markets lent support as optimism about the U.S. economy could support consumer demand for meat.
Chicago Mercantile Exchange August live cattle futures settled up 0.45 cent at 96.475 cents/lb., and August feeder cattle rose 0.9 cent to end at 133.5 cents/lb. (all figures US$).
However, rallies were capped by a ramped-up slaughter pace as meat packers work their way through a backlog of heavy cattle during a seasonal lull in beef demand. Bottlenecks of market-ready cattle resulted after the coronavirus pandemic sickened workers at a number of U.S. slaughterhouses earlier this spring, forcing some plants to shut down or slow production lines.
“When you get into the dog days of summer, it’s tough in a normal year to move up (in price), let alone one where we are still trying catch up on the backed-up cattle,” said Don Roose, president of Iowa-based U.S. Commodities.
Last week’s cattle slaughter was estimated at 680,000 head, up from 670,000 head a year earlier, the U.S. Department of Agriculture said, and Monday’s kill reached 121,000 head, the highest daily total since March.
“There’s no shortage of meat,” Roose said.
CME lean hog futures also closed modestly higher in a light bounce after Friday’s six per cent plunge in the benchmark August contract.
CME July lean hogs settled up 0.1 cent at 45.375 cents/lb. and August ended up 0.325 cent at 48.45 cents per.
Rallies were capped by plentiful hog supplies. USDA’s quarterly hog inventory report last week showed a record-large June 1 supply of hogs that was up 5.2 per cent from a year earlier. Analysts, on average, had expected a 3.7 per cent increase.
— Reporting for Reuters by Julie Ingwersen in Chicago.