By Michael Hirtzer
CHICAGO, Feb 8 (Reuters) – U.S. cattle futures tumbled more than two percent on Monday, falling in sympathy with steep downturns in equities markets and following disappointing trades last week in cash cattle.
Front-month live and feeder plummeted by their respective daily price limits of 3.000 and 4.500 cents per pound, with feeder cattle extending losses to the fourth straight session. February lean hogs were higher but all other hog contracts lost ground, retreating from recent highs.
“We’re kind of hooked at the hip with the fear factor in equities. The Dow (Jones industrial average) being down slipped into demand perceptions (for beef), whether or not that’s a reality,” said Steve Erdman, analyst at EFG Group.
Chicago Mercantile Exchange livestock futures often trade in tandem with equities markets on ideas that weaker returns in stocks could force well-heeled consumers to reduce purchases of pricy cuts of beef. Beef’s premium to pork has been on a month-long skid as shoppers favour cheaper pork cuts such as loins.
Beef packers have responded to the slower retail demand by reducing their slaughter, contributing to sluggish action in U.S. Plains cattle markets.
“We still aren’t price-competitive with pork,” Erdman added. “The retailers haven’t brought prices down enough to clean the coolers out. We aren’t seeing demand at these levels.”
CME live cattle for February delivery fell 3.000 cents to 133.050 cents per lb., the lowest since Jan. 27. Feeders for March delivery were down 4.500 cents to 149.325, their lowest since Jan. 20.
Price limits in live cattle will be expanded to 4.500 cents for Tuesday’s session and feeder cattle limits to 6.750 cents, the CME Group said on its website.
Stock indexes including the Dow Jones trimmed losses late in the session, but only after livestock futures trading was all but finished for the day.
CME February lean hogs was up 0.225 cent at 65.025 cents per lb. But more-active April hogs eased 0.575 cent to 69.725 cents per lb., far below the roughly three-month high of 71.125 cents reached a week ago.
Weather conditions were improving in key states of Iowa and Minnesota after snowfall last week hampered hog shipments. The better conditions could result in a higher volume of animals offered at market, weighing on prices, traders said.
