Chicago | Reuters — U.S. live cattle futures closed higher on Wednesday on what appeared to be technical and speculative buying at the start of a new month and quarter, analysts said.
Yet the benchmark August live cattle contract on the Chicago Mercantile Exchange remained rangebound, with rallies capped by weak beef prices as slaughterhouses worked through a backlog of heavyweight cattle.
CME August live cattle settled up 1.025 cents, at 97.3 cents/lb.
U.S. wholesale beef prices plunged in June as the cattle slaughter recovered from a slowdown earlier this spring, when the coronavirus sickened workers and prompted several meat-packing plants to close.
Wholesale prices appeared to stabilize as U.S. choice and select cutout values firmed on Monday. But prices have since resumed their slide, with choice cuts down $1.59 on Wednesday afternoon at $205.38/cwt, according to the U.S. Department of Agriculture.
“There is speculation that maybe this beef cutout has found a bottom, but it’s just that — speculation,” said Altin Kalo, agricultural economist for Steiner Consulting. It’s not yet clear, he said, how long the pandemic will depress beef prices that historically tend to recover toward the Labour Day holiday in September.
“There is a lot of demand uncertainty because of the coronavirus and the economic picture,” said Doug Houghton, analyst at Brock Capital Management.
Strength in live cattle futures pulled up feeder cattle futures, offsetting pressure from rising U.S. corn prices that signal higher feed costs. CME August feeder cattle settled up 0.225 cent at 133.075 cents/lb.
Lean hog futures closed mostly lower on plentiful hog supplies and worries about slowing Chinese demand for U.S. pork. Still, the benchmark August hog contract eked out a fractionally higher close on technical buying.
CME August lean hogs settled up 0.05 cent at 49.075 cents/lb. while October hogs ended down 1.075 cents at 48.275 cents/lb.
Traders awaited Thursday’s weekly USDA export sales report to monitor U.S. pork sales to China.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.