Key Moments
- Front-month CME live cattle futures declined for a 15th consecutive session, pressured by weaker cash cattle prices and softer seasonal beef demand.
- CME August live cattle settled at 224.425 cents per pound, while August lean hogs finished at 101.650 cents per pound after touching their highest level since May 20.
- USDA reported choice boxed beef at $366.81 per cwt, the lowest since February 20, while the pork carcass cutout rose to $104.41 per cwt.
Seasonal Demand Lull Weighs on Cattle Futures
Front-month live cattle futures on the Chicago Mercantile Exchange (CME) fell again on Friday, marking the 15th straight session of losses. Analysts, cited by Reuters, attributed the continued weakness to a sharp downturn in cash cattle prices this month and a typical seasonal slowdown in beef consumption during the hotter months.
“We are in that seasonal time-frame where in the heat, usually, our demand softens,” said Don Roose, president of Iowa-based US Commodities.
Positioning and Inter-market Spreads Pressure Cattle, Support Hogs
Market participants noted that speculative traders appeared to be unwinding inter-market spread positions by selling cattle futures and buying hog futures. According to Roose, managed commodity funds currently hold a sizable net long position in CME cattle futures, which has left the cattle market exposed to bouts of long liquidation. In contrast, these funds are net short in hog futures.
Key Futures Settlements
CME August live cattle futures closed down 2.650 cents on Friday at 224.425 cents per pound, after slipping to an intraday low of 224.200 cents, the weakest level since March 9. October live cattle futures ended the session 2.575 cents lower at 220.700 cents per pound.
In the feeder cattle market, CME August feeder cattle futures lost 0.650 cent to settle at 345.950 cents per pound.
| Contract | Exchange | Settlement Price | Move on Day | Notable Level |
|---|---|---|---|---|
| August Live Cattle | CME | 224.425 cents/lb | -2.650 cents | Low of 224.200 cents, weakest since March 9 |
| October Live Cattle | CME | 220.700 cents/lb | -2.575 cents | – |
| August Feeder Cattle | CME | 345.950 cents/lb | -0.650 cent | – |
| August Lean Hogs | CME | 101.650 cents/lb | +1.375 cents | High of 102.025 cents, strongest since May 20 |
| October Lean Hogs | CME | 87.950 cents/lb | +1.025 cents | – |
Cash Cattle, Beef Prices Slide as Packers Gain Leverage
In the southern Plains, slaughter-ready cattle reportedly changed hands this week at prices as low as $235 per hundredweight, representing a decline of $13 from the prior week and roughly $20 below prices seen two weeks earlier, according to traders.
Market participants indicated that meat packers have regained negotiating power as they procure cattle to convert into beef, while cattle feeders have shown increased willingness to move heavyweight animals.
Wholesale beef values continued to ease. The USDA priced choice cuts of beef on Friday afternoon at $366.81 per cwt, a drop of $1.57 from Thursday and the lowest reading since February 20.
Forward Demand: School Programs and Holiday Buying Still Ahead
Roose and other analysts noted that retailers are expected to step up meat purchases in the future for school lunch programs and to prepare for the September 7 Labor Day holiday. However, they emphasized that such demand is still several weeks away.
Hog Futures Benefit from Spreads, Heat-related Supply Factors
Hog futures advanced on Friday, outperforming cattle as traders engaged in inter-market spreading and as cash hog prices improved. Roose said that extremely high temperatures this week in the Midwest and Plains have been limiting hog weights, a factor that is providing support to hog futures.
CME August lean hog futures settled 1.375 cents higher at 101.650 cents per pound after reaching 102.025 cents, the highest level for that contract since May 20. October lean hog futures ended 1.025 cents higher at 87.950 cents per pound.
Cash and Wholesale Pork Indicators
The CME’s Lean Hog Index – a two-day weighted average measure of cash hog prices – was last reported at 95.10 cents, marking its highest value since October.
On the wholesale side, the USDA quoted the pork carcass cutout late Friday at $104.41 per cwt, an increase of $1.99 from Thursday.
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