U.S. livestock: Supply worries again sink CME live cattle to five-year low

Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures on Tuesday sank to a five-year low for a second straight session in anticipation of weak cash prices by Friday, traders said.

August ended 0.45 cent/lb. lower at 108.9 cents, and earlier posted a new contract low of 108.175 cents (all figures US$). October finished down 0.425 cent to 108.9 cents after marking a new low of 107.9 cents.

CME live cattle on Wednesday will return to its regular three-cents/lb. daily price limit after failing to settle at the newly-expanded 4.5-cent limit on Tuesday.

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On Tuesday, packers in Texas and Kansas bid $116/cwt for market-ready, or cash, cattle that were priced at $123, said feedlot sources. Last week, cash cattle sold at $119 to $120.

Fallen futures prices, a potential supply increase and seasonal meat sales decline threaten to pressure cash prices.

“They’re (traders) anticipating more cattle than we’re currently seeing. And we’re in the summer doldrums which doesn’t bode well for cattle or beef demand,” JRS Consulting owner Jack Salzsieder said.

The morning’s choice beef price was up 38 cents/cwt to $209.08 from Monday. Select cuts at $196.84 rose $1.44, the U.S. Department of Agriculture said.

Tuesday was the third of five days in which funds in CME’s livestock markets that track the Standard + Poor’s Goldman Sachs Commodity Index periodically sold, or “rolled,” August long positions mainly into October.

Lower CME live cattle futures and higher corn prices dropped the exchange’s feeder cattle contracts. August feeders closed 0.85 cent/lb. lower at 138.6 cents.

Hog futures close higher

The morning’s wholesale pork price rebound and CME lean hog futures’ discounts to the exchange’s hog index for July 8 at 82.27 cents lifted contracts, said traders.

July ended up 0.325 cent/lb. to 79.95 cents. Most actively traded August finished 0.825 cent higher at 79.175 cents.

Tuesday morning’s wholesale pork price jumped $1.34/cwt from Monday to $90.88/cwt, mostly led by almost $5 higher loin prices, said USDA.

Grocers may be purchasing product to avoid potential shortages as hot weather delays delivery of hogs to packers, a trader said.

Some processors may soon need to raise cash bids to make sure they have enough inventory as the week progresses, he said.

Midwest cash hog prices on Tuesday morning were steady to 50 cents/cwt lower, according to regional hog dealers.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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