Live Cattle Futures sag as Wall Street retreats

U.S. live cattle futures fell more than 2% on Monday, pressured by ample beef supplies and fund-driven selling as Wall Street equities declined

Reuters

Feeder cattle futures fell even harder, dropping by 3% as U.S. corn futures rose to almost $5 a bushel for the first time since 2014, threatening cattle feeding margins.

Chicago Mercantile Exchange (CME) February live cattle futures settled down 2.725 cents at 112.300 cents per pound and CME March feeder cattle fell 4.200 cents to end at 136.025 cents per pound.

“Feeder cattle may have pulled the live cattle down,” said Doug Houghton, analyst at Brock Capital Management.

“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”

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 0.950 cent at 71.225 cents per pound.

Rising pork prices lent support. Wholesale ham prices have been particularly strong in recent days, reaching $72.83 per 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 per 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 per cwt, and the overall pork carcass price fell by 81 cents on the day.

Reporting by Julie Ingwersen Editing by Sonya Hepinstall