US cattle prices retreat from October high
AFTER rallying to a four-month high at the end of October, cattle futures prices retreated again at the start of November.
The Chicago December live cattle contract for fat finished cattle fell from 65.7¢/lb a week ago to 64.6¢/lb (85.8p/kg) on Tuesday, 3 November. In the cash market, packers have obstinately held their bids steady over the past two weeks at 63¢/lb, forcing producers to drop their offers from 65¢ to 63¢ to secure business.
Most analysts point to an absence of good news as sufficient reason for the market weakness.
Despite the rumours, there has still been no concrete announcement of beef food aid to Russia and this has dampened hopes of substantial US Department of Agriculture shipments in the near future. Meanwhile, cattle prices have also been depressed by competition from cheaper pig prices in recent days.
In the store market, opinions are mixed on whether US feedlots and packing houses are catching up with supply. All eyes are on next weeks monthly Cattle on Feed report, which tracks store cattle entering feedlots for fattening up and slaughter activity.
If the store cattle placed in feedlots are fewer and lighter, while the slaughter rate remains strong, this would help the industry become more current and support prices.
The Chicago November feeder cattle contract settled on Tuesday, 3 November at 71.07¢/lb, down from around 72.5¢/lb a week earlier.
Pig prices at a 30-year low in USA
JUST when US pig producers thought things could not get worse, prices have dropped yet again.
US pig prices have now hit thirty-year lows and market analysts are refusing to predict when prices will hit rock bottom.
The cash pig price is plummeting, at 19.5-20.5¢/lb (25.9-27.2p/kg) currently, down from 24¢ a week ago and 27¢ a fortnight ago. Weakness in the cash pig market has dragged futures prices lower. The Chicago December lean futures contract settled on Tuesday, 3 November at 35.52¢/lb, down from 39.85¢/lb a week ago and down from 55¢ in May.
Massive over-capacity is to blame, and the situation could worsen if producers carry out their expansion plans in 1999. In September, pork production hit a record high of 1.6 billion lbs, up 7% from a year ago.
Given the sheer quantity of pigs on offer, the packing houses are not interested in purchasing and slaughtering breeding stock. The next monthly report could show that several major pig producers have been forced out of business altogether.
On the export side, few analysts are still pinning their hopes on rumoured food aid to Russia. There have been no official announcements of pork shipments from the USA to Russia and other countries are expected to compete fiercely for the business.