By Joanna Newman
US producers have seen almost 2% wiped off the value of their herds this week, as packers steadily dropped their cash bids for live cattle.
By Monday (15 March), slaughterers were paying just 64¢/lb (86p/kg), after concluding transactions at 66¢/lb a week ago.
Packers are well supplied and can afford to bid down for cattle. Cash buyers are also holding out for lower prices in the expectation of bearish supply and demand data to be released tomorrow (Friday).
The monthly Cattle on Feed report is expected to reveal a 14% year-on-year increase in the number of feeder (store) cattle being placed in feedlots in February for fattening up, at about 2 million head.
Some analysts argue that this points to an increased supply of market-ready (finished) cattle in coming months.
However in the near term there could be some tightness of supply in market-ready cattle.
Faced with weaker cash prices and doubts about the long-term supply picture, cattle futures have plummeted over the past week.
The Chicago April feeder cattle contract settled on Tuesday (16 March), at 71.58¢/lb, down from 73.0¢ a week ago.
The April live cattle contract also dropped to 66.75¢/lb from about 68.5¢/lb a week earlier.