US cattle rally to be short-lived

By Joanna Levin

CATTLE prices in the USA enjoyed a rally over the past week on the back of lower corn (maize) prices which boosted livestock values. But traders fear that the price rise is likely to be only temporary.

The May feeder cattle contract closed higher on Monday, 13 April at 77.175 ¢/lb (46.3p/lb) against 76.525¢/lb a week ago, fuelled by expectations that forthcoming statistics will show 2-3% fewer cattle in the nations feedlots than a year ago.

Indications that the backlog of fat cattle waiting for slaughter is now starting to clear caused feeder cattle prices to rise by 2-3¢/lb at cattle auctions around the country.

Some traders advise caution, however. They warn that the number of cattle in the feedlots remains likely to be 25% above the five-year average until July at the earliest.

As a result, farmers are expected to face a loss on fat cattle sold to the packing houses throughout the second quarter of this year. This is confirmed by Chicago futures figures which show better prices over the last few days is an upward blip in an overall downtrend.

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