CHICAGO, Sept 1 (Reuters) – Chicago Mercantile Exchange live cattle futures slumped on Thursday to their lowest level in five years following this week’s weaker cash prices on anticipation of increased supplies over the next few months, traders said.
October live cattle ended down by the 3.000 cents per pound daily price limit, at a new contract low of 103.575 cents. December closed 2.975 cents lower at 105.400 cents and posted a low of 105.375 cents.
CME live cattle future’s trading limit will be expanded to 4.5 cents on Friday.
This week market-ready, or cash, cattle sold at $110 to $111 per cwt, $4 to $5 lower than a week ago, said feedlot sources.
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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.
“The cattle industry is losing money. And when that happens, you’re a price taker and not a price maker,” said A&A Trading Inc broker Jim Clarkson.
Packers needed fewer cattle as plants prepared to shut down on Monday for the U.S. Labor Day holiday, said traders. They added that wholesale beef demand subsided after most retailers had bought all they needed for upcoming holiday cookouts.
Labor Day meat sales will be crucial on the densely populated East Coast, which is bracing for the possible fallout from Tropical Storm Hermine.
Futures selling intensified after the government’s weekly data showed cattle weights for the week ended Aug. 20 at 829 pounds per head, up 3 pounds from the previous week.
Generally cheaper feed prices allowed feedlots and ranchers to fatten cattle more, contributing to already plentiful supplies of protein, said Clarkson.
Thursday’s corn future’s spike and live cattle futures’ selloff sank CME feeder cattle contracts. September ended 3.225 cents per pound lower at 137.300 cents.
CME lean hogs gained for a third straight day, helped by their discounts to the exchange’s hog index for Aug. 30 at 66.03 cents, traders said.
Some market participants bought hog futures and simultaneously sold live cattle contracts in a trading strategy known as spreading.
October and December finished 0.475 cent per pound higher at 63.325 and 58.000 cents, respectively.
Eroding cash prices and uncertainty regarding post-Labor Day wholesale pork movement, due to ample supplies, capped market advances, analysts and traders said.
The government reported that Thursday morning’s average cash hog price in Iowa/Minnesota tumbled $2 per cwt from Wednesday to $60.45 in extremely light volume.
The morning’s wholesale pork price rose 48 cents per cwt from Wednesday to $78.48, the USDA said.
