Weakness in Cattle Futures Continues, Hogs Mixed
September 26 2017 - 03:46PM
Dow Jones News
By Benjamin Parkin
Cattle futures extended losses as traders continued to take
stock of increases in supply expected early next year.
Live cattle contracts for October fell 0.9% to $1.08275 a pound
at the Chicago Mercantile Exchange on Tuesday. Front-month
September feeder cattle futures rose 0.1% to $1.50575 a pound while
later months fell.
The ongoing weakness came after the U.S. Department of
Agriculture said last week that feeders placed more cattle than
expected in feedlots for fattening in August, suggesting that
supplies of slaughter-ready cattle would increase early next year
and depress prices. The agency also said that stocks of beef in
commercial freezers rose 10% in August from a month earlier, well
above expectations.
That prompted a selloff in cattle futures, with a number of
contracts falling to their lower limits on Monday.
"The market looks to continue to push lower over the near-term,"
The Hightower Report said in a note to clients, adding the losses
were more indicative of a correction than a negative trend.
When placements were accounted for by weight and state, said
Larry Hicks, owner of CattleHedging.com, supplies of cattle should
fall in the fourth quarter of this year.
High processing margins -- which exceeded $100 a head through
September, according to the HedgersEdge Index -- would encourage
meatpackers to pay more on the cash market to secure supply, Mr.
Hicks said. That should help support cash prices the remainder of
this year.
Analysts are looking to the online Fed Cattle Exchange on
Wednesday morning for signs feedlots will build on last week's cash
market strength to charge higher prices. Last week cattle sold for
an average of $106.67 per 100 pounds at the auction, with prices
rising as high as $109 later in the week.
Hog futures were mixed. The CME's front-month October lean hog
contract fell 1.9% to 55.25 cents a pound, hitting a new low for
the year, while latter months rose.
Cash and pork prices have struggled amid high slaughter numbers,
which rose to a record 460,000 head on Monday, though wholesale
pork inched higher on Monday and at midday Tuesday.
Analysts see little prospect of near-term relief in the hog
market, though some expect prices to firm later this year as
meatpackers work through slaughter-ready supplies.
Write to Benjamin Parkin at benjamin.parkin@wsj.com
(END) Dow Jones Newswires
September 26, 2017 15:31 ET (19:31 GMT)
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