Chicago | Reuters — Live cattle futures on the Chicago Mercantile Exchange closed lower on Wednesday as traders booked profits, one day after the benchmark April contract set a life-of-contract high and the U.S. Agriculture Department reported a three per cent year-on-year drop in the size of the U.S. cattle herd.
CME April live cattle settled down 0.8 cent at 162.225 cents/lb., retreating from Tuesday’s contract high of 163.575 cents (all figures US$). Front-month February live cattle ended down 0.425 cent, at 158.425 cents.
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CME March feeder cattle futures fell 2.9 cents to settle at 183.25 cents/lb.
Cash cattle trade has been thin so far this week, and wholesale beef prices ticked lower on Wednesday, with choice cuts down $1.02, at $265.07 per hundredweight (cwt), extending a three-week seasonal slide.
However, a shrinking U.S. cattle herd underpinned the futures market. USDA on Tuesday said the total U.S. cattle herd as of Jan. 1 was down three per cent from a year ago, and the beef cow herd dropped to 28.9 million head, its lowest level since 1962, following a drought that raised feed costs across the U.S. Plains.
“The takeaway is, from the consumer standpoint, they need to brace for high-priced beef for a few years. We have got to re-build the cattle herd, and that usually takes three years,” said Don Roose, president of Iowa-based U.S. Commodities.
In the hog markets, CME February lean hog futures settled down 0.9 cent at 73.975 cents/lb., while most-active April hogs ended down 2.125 cents at 84.3 cents/lb.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
