By Joanna Levin
AFTER months of decline, US feeder (store) cattle prices appear to have finally stabilised.
The Chicago August feeder cattle contract settled yesterday (28 July) at 69.87¢/lb, up 0.10¢ from Monday and 0.40¢ higher than a week earlier. This sideways consolidation follows a precipitous fall from 83¢/lb at the start of the year.
Analysts say a drop in feed maize prices has lent some support to feeder cattle prices, because livestock generally trades in inverse relation to the cost of feed. But feeder cattle would be expected to react far more favourably to cheaper maize.
Prices have failed to do so because of the oversupply in Americas cattle feedlots. The market is burdened by a large front-end supply of live cattle ready for the packing houses and to make matters worse these slaughter cattle weigh well above average.
Live cattle prices have also moved sideways over the past few days. The Chicago August live cattle contract settled yesterday at 60.75¢/lb, 0.57¢ below the previous days close.
Prices appear to be bouncing along the bottom, with live cattle futures hitting contract lows during last weeks trading.
Some bearish analysts argue that the trend is down, especially if the live cash market falls further. But for now, cash prices are unchanged from a week ago at 50-60¢/lb in Texas.