Key Moments
- CME August live cattle futures settled at 227.075 cents per pound after touching their lowest level since March 13 at 226.025 cents.
- Cash cattle in Kansas and Texas traded at $237 to $238 per hundredweight, down $10 to $11 from last week and about $18 from two weeks ago.
- CME August lean hog futures ended slightly lower, while the pork carcass cutout was priced at $102.42 per cwt, up 96 cents from the prior day.
Cattle Futures Extend Losses as Technical and Cash Pressures Mount
Chicago Mercantile Exchange (CME) live cattle futures declined to four-month lows on Thursday, weighed down by sharply weaker cash cattle prices and long liquidation by speculative traders, according to analysts cited by Reuters.
CME August live cattle futures closed 3.050 cents lower at 227.075 cents per pound, after earlier falling to 226.025 cents, the contract’s weakest level since March 13. October live cattle futures finished 2.725 cents lower at 223.275 cents per pound.
Technical Break Triggers Speculative Selling
Both the August and October live cattle contracts moved below their respective 200-day moving averages this week, which analysts said encouraged additional speculative selling. Managed commodity funds currently maintain a substantial net long position in live cattle futures, leaving the market exposed to further long liquidation.
In the feeder cattle segment, CME August feeder cattle futures dropped 3.350 cents to settle at 346.600 cents per pound.
Cash Market Weakness and Shifting Leverage
A pronounced decline in cash cattle prices over the last two weeks set a bearish tone for the futures complex. Traders reported slaughter-ready cattle changing hands in Kansas and Texas this week at $237 to $238 per hundredweight, a decrease of $10 to $11 from last week and roughly $18 below prices from two weeks ago.
Cassie Fish, analyst and author of The Beef industry blog, noted that in response to a historic shortage of US cattle, feeders have kept animals on feed for extended periods over the past two years to add weight and boost beef production. She indicated that this approach has likely reached its limit, leaving feeders with heavier cattle that must be marketed, which has strengthened the bargaining position of packers.
“The packer has regained leverage, after losing record amounts of money for the last six months,” Fish said.
Packers’ Margins Deep in the Red
Despite the recent easing in cash cattle prices, beef processing margins remain significantly negative. Livestock marketing advisory firm HedgersEdge.com LLC estimated that packers are losing nearly $300 per head of cattle. However, lower cash cattle values may help curb those losses over time.
“We were in an unsustainable economic dynamic. Now we are correcting,” Fish said.
Wholesale Beef and Pork Price Developments
Wholesale beef prices continued to move lower, a pattern analysts described as typical for late July. The USDA reported Thursday afternoon that choice beef cuts were priced at $368.38 per cwt, down $2.90 from Wednesday and marking the lowest level since February 20.
| Market | Contract / Product | Price | Change | Additional Detail |
|---|---|---|---|---|
| CME Live Cattle | August Futures | 227.075 cents/lb | -3.050 cents | Intraday low at 226.025 cents, lowest since March 13 |
| CME Live Cattle | October Futures | 223.275 cents/lb | -2.725 cents | Traded below 200-day moving average |
| CME Feeder Cattle | August Futures | 346.600 cents/lb | -3.350 cents | Pressured by weaker cash cattle |
| Cash Cattle | Kansas & Texas | $237 – $238/cwt | Down $10 – $11 vs last week | About $18 lower than two weeks ago |
| Wholesale Beef | Choice Cuts | $368.38/cwt | – $2.90 vs Wednesday | Lowest since February 20 |
| CME Lean Hogs | August Futures | 100.275 cents/lb | -0.050 cent | Earlier hit 100.925 cents, highest since May 28 |
| CME Lean Hogs | October Futures | 86.925 cents/lb | +0.200 cent | Futures closed mixed |
| Wholesale Pork | Pork Carcass Cutout | $102.42/cwt | + $0.96 vs Wednesday | USDA late-Thursday quote |
Hog Futures End Mixed as Pork Cutout Strengthens
Hog futures on the CME finished the session mixed. August lean hog futures eased by 0.050 cent to close at 100.275 cents per pound, after earlier climbing to 100.925 cents, the contract’s highest level since May 28. October lean hog futures gained 0.200 cent to settle at 86.925 cents per pound.
On the cash side of the pork complex, the USDA placed the pork carcass cutout at $102.42 per cwt late on Thursday, an increase of 96 cents from Wednesday.
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