Chicago | Reuters — U.S. live cattle and feeder cattle futures sank on Thursday as a three-day rally ran out of steam.
Weakness in equities and the cash cattle market weighed on futures at the Chicago Mercantile Exchange (CME), brokers said. Futures markets rose the previous three days in a turnaround from multi-month lows reached last Friday.
Gains in the stock market often help boost cattle futures by raising hopes for improved beef demand, but the Dow Jones Industrial Average closed down slightly on Thursday.
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In the cash cattle market, lower prices were not a huge surprise, said Rich Nelson, chief strategist for brokerage Allendale. He noted trades of $178 per cwt in Nebraska, down from $181 last week, and of $178 per cwt for “lower quality” cattle in Texas, down from about $180-$181 per cwt last week.
Futures prices indicate that cash prices in the south may fall further to $173-$176 per cwt, Nelson said.
CME December live cattle LCZ3 futures settled down 3.025 cents at 174.750 cents per pound. February 2024 live cattle futures LCG24 slid 3.450 cents to 175.325 cents per pound.
January 2024 feeder cattle futures FCF24 dropped 3.400 cents to 227.500 cents per pound.
Analysts anticipate the U.S. Department of Agriculture on Friday will report placements of cattle into U.S. feedlots in October were up 4.9 per cent from a year earlier and that there were 1.8 per cent more cattle on feed for the slaughter market as of Nov. 1.
A month ago, monthly USDA data revealed September cattle placements were bigger than analysts expected, contributing to the recent slide in futures prices. The data eased supply concerns for early next year, after ranchers had reduced the U.S. herd due to years of drought.
“We know we solved the first half 2024 beef supply concern,” Nelson said. “We’re setting ourselves up for a serious tight-supply situation with the second half of 2024.”
CME lean hog futures rose slightly, with the December contract LHZ3 finishing up 0.425 cent at 71.475 cents per pound after earlier hitting a one-week low.
–Reporting for Reuters by Tom Polansek.
