By Joanna Levin
Softer beef prices depress US cattle market
SOFTER beef product prices have led the US cattle market lower in recent trading. As buying tailed off ahead of last weeks Memorial Day weekend, the choice grade cut-out for 550-700lb animals closed at 101.72¢/lb, down from 102.47¢ a week earlier.
The cut-out grade lost nearly another cent as trading resumed after the long weekend. In comparison the cash market for live cattle remained fairly stable with packers bids at 63¢/lb yesterday (Wednesday), unchanged from a week ago.
But Chicago futures fell abruptly, dragged lower by the drop in prices for beef products after a quiet few days of sideways trading. Even the recent weakness in corn prices failed to stimulate the feeder cattle market. The Chicago August feeder cattle contract closed yesterday (Wednesday) at 75.50¢/lb, down 0.82¢ from Tuesday and down about half a cent on the week.
While the beef and live cattle markets are experiencing seasonal fluctuations in response to holiday demand, the overall trend for US cattle remains downwards due to oversupply.
Even though US beef exports were up 13,742 metric tonnes or 9% during the first quarter, this was more than offset by a 19% jump in US imports during the same period as Australia and New Zealand rushed to export beef to the US in response to the strong US dollar.
Pig prices back down to earth in USA
AFTER a strong rally in US pig prices during the first half of May, the US pig market has suffered a sharp downturn. But analysts argue that a drop in prices was needed as the market had become overheated. The recent rally in futures prices was unjustified given the oversupply of pigs in the US, they say.
Packers have dropped their bids for live pigs, resulting in cash prices sliding by as much as 10% in recent days to 40.50-41.50¢/lb at the terminal. The packers have been busy, with the latest weekly slaughter rate at 752,000 head, compared with 1,031,000 last week and 688,000 this time last year.
Weaker pig products prices are also depressing the futures market. Having hovered precariously in a narrow range immediately before and after the Memorial Day holiday weekend, US pig prices plummeted yesterday (Wednesday).
The Chicago June futures contract for lean hogs lost 1.05¢/lb yesterday (Wednesday) to close at 60.25¢/lb, down about 0.75¢ on the week and its lowest level since late April.