Chicago | Reuters –– U.S. benchmark live cattle futures drifted lower on Wednesday, pressured by expectations of weaker cash cattle prices this week and a seasonal slowdown in demand for beef following the Labour Day holiday, traders said.
“We finished the last official holiday of summer, and now people are going to wait for the beef to break a little,” said Dan Norcini, an independent livestock trader.
The U.S. Department of Agriculture late Wednesday quoted choice boxed beef cutout at $230.65/cwt, down one cent from Tuesday, and select cutout fell $2.67 at $208.95 (all figures US$).
The cattle market is still reacting to the shutdown of a Tyson beef slaughterhouse in Holcomb, Kansas, that was shuttered by a fire last month. The facility is expected to return to business as usual by the end of the year, but cattle supplies could back up in the interim, pressuring cash values, traders said.
“The cattle have gone elsewhere but at the packing plants they are showing up at, that’s extra supply. So they (meat packers) can be picky, sit back and play hardball,” Norcini said.
CME October live cattle futures settled down 0.25 cent at 99.025 cents/lb. and December live cattle fell 0.75 cent, to 103.575 cents.
Feeder cattle futures rose, bucking weakness in live cattle and drawing support from sliding CBOT corn futures.
CME October feeder cattle rose 1.325 cents to settle at 133.425 cents/lb.
Hog futures closed mixed, with the nearby October contract settling higher and most back months declining.
Lean hog contracts settled solidly above their session lows as rising retail pork costs in China continued to fuel optimism that the Asian country will boost pork imports, possibly from the United States. China, the world’s largest pork consumer, is struggling with outbreaks of African swine fever, a deadly hog disease, in its massive herd.
However, near-term fundamentals are bearish as plentiful domestic hog supplies pressure U.S. cash hog and pork prices.
Cash hog prices in the closely watched Iowa and southern Minnesota market fell 90 cents on Wednesday, and the pork cutout fell $1.74, according to USDA.
CME October lean hog futures settled up 0.6 cent at 67.125 cents/lb. while December fell 0.6 cent at 65.225 cents.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.