By Joanna Levin

FEEDER cattle prices in the USA are volatile ahead of this Fridays cattle report. Traders are nervously waiting for any signs that the oversupply situation in US feedlots is abating.

The Chicago August feeder cattle contract climbed steeply during the first half of last week but then retreated in recent trading to close on Tuesday (16 June) at 74.5¢/lb, unchanged from Monday of last week.

After six months of falling prices, feeder cattle producers hope the recent sideways trading is a sign that the market is bottoming out. Packers, they hope, are working through the supply of live cattle.

But both producers and packers are suffering for terrible margins this year. Cattle owners are losing as much as $50-75/head, according to some industry estimates.

So far, there has been little change in the price of slaughter steers, with packers bidding 64¢/lb and owners offering at 66¢/lb. Demand for beef is expected to remain firm ahead of the Independence Day (4 July) weekend, a traditional barbecue holiday.

Choice grade beef cut-outs at 550-700lbs are trading at about 100.5¢/lb, compared with 98.8¢/lb a week ago. But many analysts expect beef prices to hit a ceiling at 102¢/lb because the industry is burdened with record-heavy slaughter weights.

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