CHICAGO, June 13 (Reuters) – U.S. live and feeder cattle futures each plummeted by their daily trading limits on Monday, declining in a technical selloff triggered in part by rising animal feed prices, traders and analysts said.
Losses in feeder cattle of roughly 3 percent outpaced declines in the more actively traded live cattle futures at the Chicago Mercantile Exchange, with surging corn prices boosting costs for cattle fattening in feedlots. Feedlots
typically are less willing to pay up for cattle when feed prices rise and squeeze profit margins.
Read Also
Feed Grains Weekly: Price likely to keep stepping back
As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
“The dip is all about the grain prices,” said Tim Hackbarth, a cattle broker at the Zaner Group.
CME August live cattle settled down their daily trading limit of 3.000 cents to 114.350 cents per lb, and August feeder cattle fell their limit of 4.500 cents to 141.050 cents per lb.
Each contract declined to the lowest since May 26. Trading limits for Tuesday will be expanded to 4.500 cents in live cattle and 6.750 cents in feeder cattle, the CME Group said on its website.
Hackbarth added that cheaper competing proteins continued to erode consumer demand for beef. U.S. Department of Agriculture data released after the close of trading showed slightly lower wholesale beef prices and gains in wholesale pork.
“Demand has a big question mark,” he said. “Chicken and pork are on the cheap.”
Lean hogs were mostly higher as investors continued to roll positions out of front-month June into deferred positions. Prices gained on speculative buying tied to optimism of further U.S. export sales of pork to China, where retail prices for the staple meat were record high.
Most-active August hogs settled up 1.200 cents at 87.825 cents per lb, just below their lifetime peak of 88.000 cents reached earlier in the session.
