Chicago | Reuters — U.S. live cattle futures fell more than two per cent on Monday, pressured by ample beef supplies and fund-driven selling as Wall Street equities declined, analysts said.
Feeder cattle futures fell even harder, dropping by three per cent as U.S. corn futures rose to almost $5 a bushel for the first time since 2014, threatening cattle feeding margins (all figures US$).
Chicago Mercantile Exchange (CME) February live cattle futures settled down 2.725 cents at 112.3 cents/lb. and CME March feeder cattle fell 4.2 cents to end at 136.025 cents/lb.
“Feeder cattle may have pulled the live cattle down,” said Doug Houghton, analyst at Brock Capital Management.
Worries about surging coronavirus cases weighed on global equity markets, a factor that tends to raise uncertainty about U.S. consumer demand for beef.
Wholesale beef prices rose on Monday, but ample supplies of cattle signaled a headwind, with average weights running higher than a year ago.
“Once we get into the second quarter (of 2021), there should be a drop-off, but right now, the live cattle market is looking at some big first-quarter supplies,” Houghton said.
Lean hog futures rose, bucking the weakness in cattle futures, with CME February lean hogs settling up 0.95 cent at 71.225 cents/lb.
Rising pork prices lent support. Wholesale ham prices have been particularly strong in recent days, reaching $72.83/cwt on Thursday, up from $56.20 on Dec. 28, according to the U.S. Department of Agriculture.
Monday’s midday USDA pork cutout data indicated a $25/cwt jump in ham prices to $98.24, catching traders’ attention. However, USDA’s updated afternoon price data, released after the CME close, showed a drop of $4.40, to $68.43/cwt, and the overall pork carcass price fell by 81 cents on the day.
— Reporting for Reuters by Julie Ingwersen in Chicago.