October lean hog futures strengthen - CME
Live cattle stabilise after sell-off
7 August 2024
2 minute read
By: Chicago Mercantile Exchange live cattle and lean hog futures stabilised on Tuesday after sliding during the previous session on fears that the US may be headed for a recession, reported Reuters.
Monday's declines in cattle and hogs were overdone, analysts said. Still, livestock traders remain nervous about the risk for further setbacks linked to economic concerns and potential losses in the stock market.
Most-active October live cattle finished 0.050 cent higher at 179.050 cents per pound after tumbling more than 4% over the previous three sessions. The contract hit its lowest level in nearly three months on Monday.
"Everybody's gun shy," said Matt Wiegand, commodity broker for FuturesOne. "A lot of people got burned with the hard washout."
CME feeder cattle futures remained under pressure after dropping this week to their lowest prices since December. Most-active September feeders closed down 0.675 cent at 240.575 cents per pound.
Volatile cattle markets discourage ranchers from deciding to expand herds they slashed in recent years because of drought and high feed prices, Wiegand said.
Tyson Foods, one of four major US beef processors, said on Monday that producers are not significantly rebuilding herds.
"We have an inconsistent market with a lot of volatility," Wiegand said.
Declining equities and fears about a recession weigh on cattle futures as traders worry a weak economy will reduce consumers' demand for beef.
Economic worries generally affect hog futures less than cattle because pork is considered to be less of a premium protein than beef, traders said. The hog market also sidestepped some selling pressure on Monday because funds do not hold a sizable long position, they said.
CME October lean hog futures ended 0.675 cent stronger at 76.400 cents per pound.
In other news, Argentina reduced its beef export tax to 6.75% from 9% to promote sales to foreign buyers, according to a government decree.
Separately, China's eastern Shandong province reported five people were infected with anthrax and a beef cattle farm was shut after an outbreak in the agricultural province.
