Chicago cattle prices bounced up from multi-year lows, on technical support, but the market remains under pressure thanks to ample beef supply, and sluggish US demand.
Prices for both live cattle, which are ready for slaughter, and feeder cattle, which are ready for fattening up on feedlots, are under pressure.
Live cattle prices hit a four-year low of 113.725 cents a pound on Monday, while feeder cattle hit a three-year low 134.250 cents a pound.
Stephen Wagner, at CHS Hedging, told Agrimoney that live cattle future were “finding support on the lows,” noting technical support.
“If you look at the August live cattle, today is the second day holding that support below 110 cents a pound,” he said.
Feeder cattle also found a floor.
“We were down hard and rallied back to close,” Mr Wagner said of Monday’s trade. A big part of that rebound was cheaper corn.”
But despite the day’s rally, cattle futures remain under long term pressure.
“Discounts in the futures markets has caused too much beef coming out the market too fast,” Don Roose, at US Commodities, told Agrimoney.
And the US cattle on feed report, released this week, is expected to show higher numbers of cattle working their way through the feedlots to slaughter.
“There is going to be more beef and the consumer demand isn’t there, the exports aren’t’ there,” agreed Mr Wagner.
Summer grilling season
Retailers have now largely completed their buying for the summer grilling season, in particular July 4, which sees a spike in meat demand as Americans celebrate Independence Day with barbecues.
The market will now see subdued buying over the summer months, until retailers start to buy for winter holiday season.
And hot weather in much of the US bodes poorly for summer meat consumption.
“Higher temperatures mean demand for less beef,” said Mr Wagner. “People are interested in eating less.”
August feeder cattle futures were up 1.7%, at 138.950 cents a pound in midday deals, while August live cattle futures were up 1.2%, at 111.550 cents a pound.
(Source – http://www.agrimoney.com/news/cattle-prices-bounce-from-multi-year-lows–9679.html)