CHICAGO, Sept 6 (Reuters) – U.S. live cattle futures fell declined more than 2 percent on Tuesday, nearing their lowest levels in six years on pressure from big supplies of cattle and beef and lower wholesale meat prices, traders said.
Cattle broke below the psychological threshold of 100 cents per lb for the first time since November 2010 following steep drops in boxed beef prices, which sank to the lowest since December 2015, according to U.S. Department of Agriculture data.
Feeder cattle futures and lean hogs each eased as much as 3 percent at the Chicago Mercantile Exchange, with investors selling all three classes of livestock futures on signs consumer demand was outpaced by supply.
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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.
“It’s all falling apart,” said Tim Hackbarth, analyst at brokerage the Zaner Group in Chicago. “Technically oversold or not, (live cattle) probably have a little work to do to the downside.”
Live cattle for October delivery finished 1.575 cents lower at 100.025 cents per lb, easing for the fourth straight session. The contract touched a lifetime low of 99.375 cents per lb, before recouping losses on light short-covering.
Choice-grade beef declined 81 cents to $190.28 per cwt while wholesale pork prices edged up $2.52 to $80.13 per cwt, USDA said after the close of futures trading.
Beef has struggled at the retail level. Prices are lower than a year ago, but steaks and hamburgers have lost market share to poultry in recent years while U.S. pork production is expected to be record-large this year.
“There’s still a ton of competition from cheaper protein, and that’s not going away any time soon,” Hackbarth said of beef.
CME October feeder cattle futures finished 3.875 cents lower at 128.200 cents per lb, above their lifetime low of 127.575 reached earlier on Tuesday.
CME October lean hog futures were down 1.825 cents at 58.925 cents per lb, the lowest since Aug. 25 and near their contract low of 57.575 reached a month ago.
Hogs were further pressured by a fire at a Smithfield Foods Inc slaughterhouse late on Monday in Monmouth, Illinois. An extended closure at the plant that can process more than 10,000 hogs per day would reduce local demand and weigh on prices, dealers said.
