By Joanna Levin
THE American beef market is experiencing one of its most volatile periods in recent months. Cattle futures prices plummeted last week and they soared before finally collapsing yesterday (Wednesday).
The Chicago Mercantile Exchange live cattle futures contract for September closed yesterday at 59.625¢/lb, down 1.225¢ on the day and down from 62.5¢ at the start of last week.
The September futures contract followed a similar roller-coaster path, settling on 19 August at 67.975¢/lb, down almost 1¢ on the day and 2¢ lower than the beginning of the previous week.
At these levels, most embattled US ranchers are losing heavily. The market has reacted bearishly to the latest Cattle on Feed report released a week ago by the US Department of Agriculture.
The report shows that the year-on-year number of cattle being fattened up in feedlots with a capacity of over 1000 head has grown 2% to 8.99m.
Although the year-on-year number of new placements into the feedlots dropped 3% to 1.93 mn head during July, fat cattle marketings to packing houses also shrank 3% to 2.05 mn cattle.
On the positive side, there are more medium weight cattle are being slaughtered and fewer heavy cattle. This suggests that producers are slowly overcoming their reluctance to market loss-making cattle and this could help reduce long-term oversupply.