Chicago | Reuters — U.S. live cattle futures closed mostly lower on Thursday as wholesale beef prices began to retreat from historic highs as the U.S. slaughter pace improved, generating more meat supplies, analysts said.
Chicago Mercantile Exchange (CME) August live cattle futures settled down 1.425 cents at 97 cents/lb. (all figures US$). Front-month June bucked the trend, settling up 0.25 cent at 94.125 cents. CME August feeder cattle ended down 2.025 cents, at 131.05 cents/lb.
The daily kill at U.S. meat-packing plants has begun to rebound for both cattle and hogs, after the COVID-19 pandemic caused widespread worker shortages in April. The U.S. Department of Agriculture (USDA) estimated Thursday’s kill at 92,000 head of cattle, the most since April 16, and 372,000 hogs.
Read Also
Alberta crop conditions improve: report
Varied precipitation and warm temperatures were generally beneficial for crop development across Alberta during the week ended July 8, according to the latest provincial crop report released July 11.
As a result, wholesale beef prices have eased. USDA late Thursday reported the cutout value for choice beef at $450.92/cwt, down $15 from a day earlier and the second straight decline after the historic high set Tuesday at $475.39.
“Our slaughter is better than a week ago, (and) better than two weeks ago. It probably won’t get back to last year’s levels any time soon, but it is hurting the cutout values,” said Brian Hoops, president of Midwest Market Solutions.
However, a backlog of market-ready cattle at feedlots continued to worry traders, along with uncertainty about consumers’ appetite for high-priced beef.
“There is a real concern in the industry that not only are we backing up cattle … but maybe some consumer demand is starting to back off, Hoops said.
President Donald Trump on April 28 invoked the 1950 Defense Production Act to mandate meat plants stay open during the pandemic, after companies warned of meat shortages. The pandemic caused at least 30 meat-packing plants to temporarily close over the past two months.
CME lean hog futures closed mixed, with the June contract settling up 0.875 cent at 58.75 cents/lb. and the August down 0.325 cent at 58.8 cents.
After the close, USDA showed the U.S. pork cutout, an indicator of wholesale prices, down $3.42 at $113.79/cwt. The price for pork bellies, used for bacon, was down $26 at $134.41, after rising above $200 earlier this week.
USDA reported export sales of U.S. pork in the week ended May 7 at 10,800 tonnes, down 76% from the prior four-week average. Pork sales to China totaled 6,100 tonnes.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
