U.S. livestock: Cattle limit down after bearish USDA surprise

Chicago | Reuters — U.S. live cattle and feeder cattle futures tumbled by their respective daily price limits on Monday, declining two per cent or more in a selloff triggered by bearish U.S. Department of Agriculture data released after Friday’s session.

Cattle gapped lower on their price charts at the opening of trading, before locking limit-down in a move that could portend further losses when trade resumes at the Chicago Mercantile Exchange on Tuesday, traders said.

USDA in its monthly Cattle on Feed report on Friday showed the number of cattle placed on feed in April was seven per cent above last year, compared with analysts’ expectations for a slight reduction.

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“The placements number obviously was a huge miss,” said Top Third Ag Marketing analyst Craig VanDyke.

Several live cattle contracts finished the session down by the daily limit of three cents, with most active August easing to 114.45 cents/lb., a roughly 2-1/2 week low (all figures US$). Price limits expand to 4.5 cents on Tuesday, the CME Group said.

The contract eased for the third straight session, shedding 4.6 per cent during that stretch for the worst such performance in its history.

CME August feeder cattle fell by their 4.5-cent limit to 143.425 cents/lb., lowest in about a week. Trading limits in feeder cattle expand to 6.75 cents on Tuesday.

Lean hog contracts declined by one per cent or more. Front-month June futures settled 0.775 cent lower at 79.075 cents/lb., dropping the fifth straight session to the lowest levels since April 27.

Prices for cattle and hogs, and beef and pork, typically rise in May as retailers buy meat to offer in sales surrounding the U.S. Memorial Day holiday on the last Monday of May, considered the unofficial start of the summer grilling season.

But much of the buying is done while beef and pork packers are also likely to idle at least one day surrounding the holiday, reducing demand for slaughter.

“Memorial Day demand is lightening up. We’re not feeding the bull,” VanDyke said of bullish news that could prompt higher prices.

After the market closed on Monday, USDA released monthly cold storage data for April showing how much beef and pork was in U.S. freezers and refrigerators, data that was seen generally in line with pre-report expectations, traders said.

— Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago.

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