U.S. livestock: CME cattle sink to June lows

Lean hogs set contract lows

Chicago | Reuters — Chicago Mercantile Exchange cattle futures plunged to four-month lows on Monday under pressure from bigger-than-expected placements into U.S. feedlots last month.

Lean hog futures set contract lows.

The U.S. Department of Agriculture, in a monthly report issued after trading ended on Friday, said placements of cattle in feedlots during September totaled 2.21 million head, up 6.1 per cent from a year earlier. Analysts on average expected a 0.8 per cent increase.

As of Oct. 1, there were 11.6 million cattle in feedlots, up 0.6 per cent from 2022. Analysts estimated a slight decline from last year.

“The trade was just overall not expecting to see those numbers,” said Austin Schroeder, analyst for Brugler Marketing and Management.

CME December live cattle settled down 6.275 cents at 178.35 cents/lb. and hit its lowest price since June 26 at 178.175 cents (all figures US$). February live cattle tumbled by the daily exchange-imposed limit of 6.75 cents, to 180.975 cents/lb., and touched its lowest price since June 22.

January feeder cattle also hit their lowest price since June 22 and ended down 7.35 cents at 235.7 cents/lb.

After the sell-off, CME on Tuesday will temporarily expand daily trading limits to 10 cents from 6.75 cents in live cattle and to 12.25 cents from 8.25 cents in feeder cattle.

The markets still have a bullish longer-term outlook after drought and high feed costs caused ranchers to reduce their herds, Schroeder said.

“We’re not building back herd numbers just yet,” he said.

But the bigger-than-expected cattle placements likely have market participants rethinking the supply outlook for late winter and early spring 2024, Steiner Consulting Group said in a note.

In the hog market, December futures settled up 0.175 cent at 66.175 cents/lb. after setting a contract low of 65.4 cents on Friday. The February, April and May lean hog contracts set new lows on Monday.

— Tom Polansek reports on agriculture and ag commodities for Reuters from Chicago.