Pig crisis drags down US cattle futures

By Joanna Newman

THE unprecedented crisis in the US pig market has dragged cattle futures prices down in recent days.

With pig prices now at half their level in July, the Chicago December futures contract for live cattle has also come under pressure, settling on Monday (7 December) at 61.85¢/lb, down from 63.45¢/lb two weeks ago ahead of the Thanksgiving holiday.

There has been little change in the cash price paid for slaughter animals, with packers paying around 61-62¢/lb, unchanged in a couple of weeks. Producers are taking heart from this stability, but there are few indications of any market rally in the near term.

Despite the imminent holiday season, beef demand is lacklustre and packers have not yet stepped up their activity as much as hoped. Last week the slaughterhouses processed 662,000 head of cattle, up from 614,000 the previous week. But this is down from 665,000 a year ago.

Meanwhile mild weather is enabling cattle in the feedlots to gain weight faster, thereby exacerbating oversupply. At least cheaper grains in recent weeks have helped lower producers break-even levels for market-ready cattle.