Chicago | Reuters — Chicago Mercantile Exchange live cattle futures fell on Tuesday in a technical-selling and profit-taking setback from 3-1/2 month highs posted in the prior session.
Sharply lower feeder cattle futures amid higher corn feed costs put further pressure on live cattle contracts, as both livestock markets took a breather after scaling to the highest levels of the summer.
Despite the downturn, expectations for tightening cattle supplies due to a southern U.S. Plains drought and high feed costs kept a floor under the market, traders said.
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Cash cattle prices, which rose in weekly dealings last week, are likely to remain firm once trading develops later in the week, they said.
“The pressure in cattle had to do with technical selling and weakness in the feeder cattle futures … And there’s always some profit taking that goes on when the market comes into a week this strong and everybody’s waiting for the cash market to develop,” said Doug Houghton, analyst at Brock Capital Management.
CME August live cattle futures ended 0.375 cent lower at 137.975 cents/lb., while most actively traded October fell 1.05 cents, to 143.175 cents (all figures US$). September feeder cattle futures closed down 3.15 cents at 182.5 cents/lb.
Inflation-rattled U.S. consumers are likely to face more pain from high beef prices as ranchers are reducing cattle herds due to drought and lofty feed costs, according to economists.
Cattle supplies are expected to tighten later this year and into next year and beef production in the fourth quarter is already forecast to be down sharply from a year earlier.
CME lean hog futures were mixed as profit taking and technical selling pressure overshadowed support from firm cash hog prices.
August lean hogs ended 0.4 cent higher at 122.2 cents/lb. while most-active October fell 0.7, to 99.6 cents.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.
