23 September 2022

2 minute read

By: Melanie Epp

Chicago Mercantile Exchange (CME) live cattle futures ended lower on Thursday, extending a pull-back from four-month highs set this week as traders worried about the health of the world economy and softening demand for beef, reported Reuters, citing traders.

CME October live cattle ended down 1.025 cents at 144.850 cents per lb and the most-active December contract fell 1.400 cents to settle at 149.350 cents per lb, dropping below chart support at its 50-day moving average.

CME November feeder cattle futures fell 2.275 cents to settle at 178.050 cents per lb.

Livestock traders were digesting news of the Federal Reserve's move on Wednesday to raise interest rates and its projection of more large increases to come as it fights inflation.

Worries about the economy raised uncertainty about consumer demand for pricy cuts of beef. Wholesale beef prices eased on Thursday afternoon, with choice cuts down 73 cents at $248.40 per hundredweight (cwt), the lowest since March of 2021, according to the US Department of Agriculture (USDA).

In the cash market, fat cattle traded in the southern Plains at $143 per cwt, up $1 from the bulk of last week's trade. While firming cash cattle prices tend to support futures, traders noted the spot October futures contract, hovering near the equivalent of $145 per cwt, held a slight premium over cash, a bearish signal.

After the futures market closed, the USDA reported US frozen stocks of beef as of August 31 at 515.7 million lbs, up 24% from a year ago, a factor that could pressure futures.

Ahead of Friday's monthly Cattle on Feed report, analysts surveyed by Reuters on average expect the USDA to report the number of cattle in US feedlots at 11.234 million head as of September 1, steady with a year earlier. August marketings were seen at 105.9% of a year earlier while placements were seen at 97.3% of a year ago.

CME lean hog futures declined on Thursday, pressured by a strong hog slaughter pace this week and macroeconomic worries.

"The seasonal increase in hog supplies, and the fact that the hog slaughter this week is running above a year ago by a fair amount, is definitely a negative market factor," said Doug Houghton, analyst at Brock Capital Management.

CME October lean hogs settled down 0.300 cent at 94.125 cents per lb and benchmark December hogs fell 0.775 cent to end at 85.675 cents per lb, dropping below support at its 40- and 50-day moving averages.

Traders await the USDA's September 29 quarterly hogs and pigs report.