Chicago | Reuters — U.S. feeder cattle futures ended lower on Tuesday after nearing a six-week high as soaring corn prices signaled that feed costs will increase.
Live cattle futures finished near unchanged after setting a fresh four-week high, and lean hog futures weakened.
Rising crop prices hung over the markets after the U.S. Department of Agriculture, in a monthly report, lowered its U.S. harvest estimates for corn and soybeans and raised forecasts for crop demand.
The adjustments pushed corn futures to their highest prices since July 2019, while soybeans touched their highest prices since July 2016.
Producers that buy feeder cattle to fatten them before slaughter will be less willing to pay high prices for the animals if they are facing increased feed costs, said Arlan Suderman, chief commodities economist for broker StoneX.
“When you look at corn prices going up, that really puts a squeeze on feeding margins,” he said.
Chicago Mercantile Exchange January feeder cattle futures slipped 0.325 cent to 140.4 cents/lb. (all figures US$). The contract earlier reached a high of 141.5 cents, its highest price since Sept. 30.
CME December live cattle futures settled up 0.05 cent at 111.875 cents/lb. after hitting their highest price since Oct. 12 at 112.3.
December lean hog futures slipped 0.475 cent to 65.125 cents/lb.
Losses were a turnaround after prices climbed on Monday when hopes for a COVID-19 vaccine rallied commodity and equity markets.
USDA, in its report on Tuesday, raised its estimate for 2020 U.S. beef production from October due to higher expected cattle slaughtering.
The agency also raised its estimates for 2020 U.S. pork production and imports and reduced its forecast for pork exports.
Traders are keeping a close eye on U.S. pork shipments to China, the world’s top pork consumer, where a fatal pig disease has decimated hog herds over the past two years.
— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.