U.S. Cattle Futures Prices Tumble to Fresh Lows, as Hogs Rally
August 26 2016 - 3:42PM
Dow Jones News
By Kelsey Gee
CHICAGO--Prices of U.S. cattle futures tumbled to a new
one-month low on Friday, reflecting fears about sluggish demand for
livestock and beef.
August live-cattle shed 2.125 cents, or 1.9%, to $1.1035 a
pound, the lowest settlement for a front-month contract since July
22, and a 2.8% decline on the week. Most-active October cattle
declined 2.175 cents to $1.0635 a pound. September feeder-cattle
futures fell 1.875 cents to $1.39925 a pound.
An uptick in supplies of beef, pork, poultry and other protein
this year has sent prices for livestock on farms and meat at the
grocery store to their lowest levels in years. While the deflation
in food costs has been a boon for consumers, wholesale buyers and
meat processors have had little incentive to bid aggressively to
keep the supply chain of market-ready animals well-stocked.
The result has been weaker cattle and hog prices this summer.
"The momentum in the cattle market is still lower," said Craig
VanDyke, an analyst with Top Third Ag Marketing, an agricultural
advisory firm in Chicago, noting that supplies remain ample.
At the same time, volatility in outside markets has kept
would-be buyers at bay, as consumer demand for steak and other
high-dollar proteins is closely tethered to disposable income.
Remarks by Federal Reserve Chairwoman Janet Yellen on Friday
sparked an initial knee-jerk reaction to sell stocks and government
bonds, according to traders, but those moves quickly reversed. In
recent trading, stocks and U.S. Treasurys again drifted lower. "A
number of outside markets were taking a toll on livestock," said
Mr. VanDyke. "The moves are so extreme and so quick, it makes it so
you can't leave your desk" to stop trading.
Prices in the hog market, meanwhile, surged. Analysts said they
suspect traders were spread-trading the two markets, selling cattle
while buying hog futures, though it was unclear why.
October futures rose 2.625 cents, or 4.5%, to 61.325 cents a
pound, after hitting a two-week low on Thursday, marking a 1%
decline for the week. December hog futures rose 2.15 cents to
56.625 cents a pound.
-Write to Kelsey Gee at kelsey.gee@wsj.com
(END) Dow Jones Newswires
August 26, 2016 15:27 ET (19:27 GMT)
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