Chicago Mercantile Exchange live cattle futures fell for a fourth straight session on Thursday, dragged down by growing worries about hefty near-term supplies, traders said.
“We’ve got more numbers (cattle) out here and more numbers coming, and that’s just a Damocles sword over this market,” said Top Third Marketing analyst Mark Gold.
Fund liquidation added to market losses after some contracts drifted below key technical support levels.
August ended 1.150 cents per pound lower at 108.850 cents. October closed 1.450 cents lower at 106.600, and below the 200-day moving average of 107.069 cents.
This week beef processors paid $114 to $116 per cwt for slaughter-ready, or cash, cattle in the U.S. Plains that a week earlier sold for $116 to $119.
Packers avoided bidding up for plentiful supplies of cattle that grew heavier during a break in hot summer weather in parts of the Plains, a trader said.
Cooler temperatures tend to allow cattle to gain weight quicker, resulting in more tonnage at a time when beef demand continues to struggle seasonally.
From Monday to Thursday the U.S. Department of Agriculture estimated that packers processed 472,000 cattle, 23,000 more than a year ago.
Bargain hunters are eager to buy futures because they are undervalued compared to cash prices, but remain cautious due to increased supplies, the trader said.
Livestock market participants monitored the steep U.S. stock market selloff as tensions escalate between the U.S. and North Korea, a Chinese ally.
China is a major importer of pork from the United States and has allowed in U.S. beef for the first time in 14 years.
CME feeder cattle slid for a fifth consecutive session on more selling after contracts settled down Wednesday’s 4.500-cent daily limit, which expanded to 6.750 on Thursday.
Feeder cattle futures will resume their normal 4.500-cent limit on Friday.
August feeders closed 0.350 cent per pound lower at 141.175 cents.
Source: Reuters via Drovers