Cattle futures end mixed amid demand worries - CME

Lean hog futures ease
calendar icon 7 May 2024
clock icon 2 minute read

Chicago Mercantile Exchange (CME) cattle futures ended Monday mixed, after conflicting market signals sent feeder cattle futures lower and nearby live cattle contracts slightly higher, reported Reuters

Lean hog futures eased, as market participants wrestled with growing uncertainty over consumer demand for meat as the US enters into the traditional summer grilling season.

In CME's lean hog market, June futures closed 0.775 cent lower at 98.175 cents per pound. Earlier in the session, the contract dipped to 97.825 cents per pound, the contract's lowest since Feb. 21.

CME June live cattle futures finished 0.300 cent higher at 176.975 cents per pound. August feeder cattle settled 1.875 cents lower at 252.875 cents per pound.

The US Department of Agriculture's choice and select beef cutout values were higher on Monday morning - with choice cuts surging. Pork cutout values also turned mostly higher, with particular strength showing in loins, ribs and belly cuts, according to USDA.

Normally, that would be a cue to traders that consumer demand going into the summer grilling season appears to be firm, analysts said.

While cutout news helped boost live cattle futures off the session's lows, warnings from publicly traded companies in the food, grocery and restaurant sectors have been cautioning Wall Street they are losing business from lower-income consumers.

"If the consumers are finally feeling the pinch from all this food inflation, that is not bullish for livestock," said Dan Norcini, an independent livestock trader.

On Monday, livestock traders paid close attention to Tyson Foods' third-quarter earnings results, Norcini said. The company's shares plunged after the US meatpacker warned that consumers are under pressure from persistent inflation and high commodity costs could weigh on upcoming results.

"That Tyson news didn't bode well for hog futures, and the market reacted to it negatively," Norcini said.

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