Chicago | Reuters — U.S. live cattle futures eased on Tuesday, as higher input costs could lead to near-term selling of cattle as producers are resistant to paying higher feed costs, traders said.
“You’ve got your cost of gains climbing and climbing,” said Scott Varilek, broker at Kooima Kooima Varilek Trading Inc. “Could be some liquidation pressure on the front, without the incentive to keep feeding.”
Chicago Mercantile Exchange June live cattle futures settled 0.425 cent lower at 115.85 cents/lb. (all figures US$).
Consumer demand remains strong, with choice beef cutouts climbing $5.79/cwt, to $290.99, and select cuts gaining $5.18, to $279.53.
“The demand is there — it’s red hot. There’s a lot of money in the industry, but it’s just not trickling down to the producer,” Varilek said.
Feeder cattle futures were mixed, with CME August feeders losing 0.225 cent to close at 150.075 cents/lb., though nearby contracts added amid volatile trade for Chicago Board of Trade (CBOT) corn futures after climbing to a new eight-year high.
Lean hogs were mixed, with the most-active contract climbing higher as pork demand remains strong, though feed costs add pressure.
CME most-active June lean hogs eased 0.175 cents, to 106.675 cents/lb.
The CME’s lean hog index, a two-day weighted average of cash prices, climbed to $107.17/cwt, its highest since October 2014.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.