Cattle prices bounce back in USA

By Joanna Newman

US cattle prices have experienced a rebound in recent days after last weeks sell-off caused by the news of an expanding US herd.

The Cattle on Feed report showed a hefty 22% year-on-year increase in the number of feeder cattle placed in pens during March at 1.7 million head.

However, the market quickly recovered from this news. The Chicago May feeder (store) cattle contract rose to 71.87¢/lb (97.6p/kg) on Tuesday (27 April), close to its level prior to the release of last weeks US Department of Agriculture report.

Encouraging the rebound has been a sharp drop in maize and wheat prices this week.

Cheaper grain lowers the cost of weight gain for livestock producers and traditionally causes an inverse reaction in cattle values.

Meanwhile packers have proved willing to pay up for live animals in recent days due to firmer beef prices.

Sales to slaughterhouses are at 65.0-65.5¢/lb and bids hovering in the 64¢/lb (87p/kg) range, up from 63¢ bids last week.

Demand is expected to increase with the market looking forward to a seasonal upturn in beef consumption as Americans fire up their barbecues.

The Russian food aid programme of free beef should also lend support to prices in coming months.

So far, there has been little impact on the market from the wrangling over US beef shipments to the EU.

In an escalating trade war, the EU Commission has threatened to ban imports of supposedly hormone-free US beef after a study showed some US beef contains hormone residues.