CHICAGO, Sept 2 (Reuters) – U.S. live cattle futures fell to five-year lows on Friday, capping their worst weekly performance so far of 2016 in a technical selloff linked to bigger cattle supplies and lower wholesale beef prices, traders said.
Lean hogs also tumbled, declining by as much as 4.8 percent at the Chicago Mercantile Exchange, with some traders exiting positions ahead of the long U.S. Labor Day holiday weekend.
Most meat packers close slaughter plants for the Monday holiday, reducing demand and weighing on cash prices paid to producers. The annual holiday on the first Monday of September is considered the last hurrah for outdoor summer grilling, signaling lower demand soon for steaks, burgers and hot dogs.
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U.S. livestock: Cattle futures come down from highs
Cattle futures on the Chicago Mercantile Exchange were weaker on Monday, coming down from recent highs.
U.S. Department of Agriculture midday data showing sharply lower wholesale beef and pork prices underscored flagging demand from retailers, triggering selling in cattle and hog futures.
CME October live cattle settled 1.975 cents lower at 101.600 cents per lb, after earlier hitting a lifetime low of 101.375. Cattle on a continuous chart fell to the lowest level since June 2011, and shed nearly 8 percent for the week.
CME October feeder cattle finished 2.450 cents lower at 132.075 cents per lb, also notching a fresh lifetime low.
“There’s a lot of negativity. The demand is not there and the kills are strong,” a Chicago cattle futures broker said.
So far in 2016, some 19.998 million head of cattle have been slaughtered, up 4.3 percent from 2015 and an indication of more plentiful supplies.
CME October lean hogs were 2.575 cents lower at 60.750 cents per lb, notching their largest daily losses in two weeks and largely wiping out the steep gains from throughout the week. Hogs reached a one-month peak on Thursday and traded
higher briefly on Friday, before reversing sharply lower.
Craig VanDyke, analyst at Top Third Ag Marketing, said investors likely were nervous about holding a futures position over a long holiday weekend, and wanted to get out.
Hogs were still trading above the multiyear lows reached about a month ago.
“We haven’t completely damaged the charts, but we ruined all the work (from this week),” VanDyke said of Friday’s hog declines.
