Key Moments
- Choice beef cutout fell to $373.95 per cwt, its weakest level since February 23 and about $26 below its June 23 peak above $400.
- CME August live cattle futures settled at 231.425 cents per pound, the lowest close since late March, while key contracts broke below their 200-day moving averages.
- CME August lean hog futures edged up to 98.450 cents per pound even as the USDA pork carcass cutout slipped to $101.21 per cwt.
Seasonal Beef Demand Weakness Pressures Cattle Futures
Chicago Mercantile Exchange (CME) live cattle futures declined on Tuesday, weighed down by falling wholesale beef prices and technical selling activity, according to analysts cited by Reuters.
Analysts noted that beef values often soften in the middle of the summer after the Fourth of July holiday, described as the final major grilling occasion before Labor Day in early September. They indicated that this seasonal pattern has been especially evident in recent weeks.
The US Department of Agriculture (USDA) late on Tuesday assessed choice beef cutout at $373.95 per hundredweight (cwt), a decline of $1.66 from Monday and the lowest level since February 23. The choice cutout has retreated by roughly $26 since surpassing $400 on June 23.
“The lull in demand that tends to take place this time of year is kicking in,” said Dan Norcini, an independent livestock trader.
Managed Money Exposure and Technical Levels Add to Selling
Analysts pointed out that managed commodity funds currently maintain a sizable net long position in live cattle futures, which they said is leaving the market vulnerable to episodes of long liquidation.
The front-month CME August live cattle contract finished Tuesday down 3.300 cents at 231.425 cents per pound, marking its lowest settlement since late March. The October contract closed 2.975 cents lower at 227.650 cents per pound and dropped below its 200-day moving average for the first time since June 4.
August feeder cattle on the CME also came under significant pressure, sliding 5.550 cents to 348.800 cents per pound and similarly breaching their 200-day moving average.
| Contract | Type | Settlement Price | Change | Notable Technical/Comment |
|---|---|---|---|---|
| August | Live cattle (CME) | 231.425 cents/lb | -3.300 cents | Lowest close since late March |
| October | Live cattle (CME) | 227.650 cents/lb | -2.975 cents | First close below 200-day moving average since June 4 |
| August | Feeder cattle (CME) | 348.800 cents/lb | -5.550 cents | Moved below 200-day moving average |
| August | Lean hogs (CME) | 98.450 cents/lb | +0.350 cent | Modest gain in quiet trade |
| October | Lean hogs (CME) | 84.375 cents/lb | +0.100 cent | Ended slightly higher |
Macro Data Fails to Lift Cattle; Cash Trade Expectations Softer
Traders appeared to overlook potential support from softer-than-anticipated US inflation figures that could have eased concerns about consumer demand for meat.
“The inflation report gave us no support today on the cattle side. It was definitely a tough day,” said Rich Nelson, chief strategist at Allendale Inc.
Nelson said that cash cattle trading had not yet emerged, but participants were bracing for weaker prices this week. In the prior week, slaughter-ready cattle in the southern Plains changed hands at $248 per cwt, a decline of $7 from the previous week.
Hog Futures Edge Up Despite Decline in Pork Cutout
CME hog futures posted slight gains in what was described as a featureless trading session. Benchmark August lean hogs settled 0.350 cent higher at 98.450 cents per pound, while October hogs ended 0.100 cent firmer at 84.375 cents per pound.
Nelson indicated that futures may have drawn modest support from hot weather in the Midwest this week, which could limit hog weights.
The USDA late on Tuesday reported the pork carcass cutout value at $101.21 per cwt, down 34 cents from Monday.
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