Chicago | Reuters—Chicago Mercantile Exchange live cattle and feeder cattle futures tumbled on Wednesday after climbing to records on dwindling U.S. supplies.
Futures prices have set all-time highs since Washington over the weekend added to supply worries by suspending cattle imports from Mexico over an outbreak of New World screwworm in Mexican cattle.
The United States imports Mexican cattle to fatten for slaughter. Such imports have become increasingly important to meet consumer demand for beef after U.S. producers slashed their herds to the lowest level in decades due to a years-long drought that burned up pasture lands used for grazing.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
“Beef consumption is still very good,” Tyson Foods CEO Donnie King said on a webcast of BMO’s Farm to Market Conference.
However, the markets were due for a correction after surging, said Matt Wiegand, broker for FuturesOne.
“We’re pretty deeply overbought,” he said.
CME August live cattle futures LCQ25 fell 2.25 cents to 209.375 cents per pound after setting a high of 214.500 cents.
August feeder cattle futures FCQ25 sank 4.025 cents to end at 301.975 cents per pound after reaching a high of 307.675 cents.
CME lean hog futures were also weaker, with the June contract LHM25 closing 0.65 cent lower at 98.85 cents per pound.
Traders on Thursday will review weekly U.S. export sales data for beef and pork.
