Cattle futures reversed course, falling as traders fretted over increasing supplies.
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Wholesale beef prices slid as of midday Tuesday, under pressure because of a seasonal tendency to eat less red meat in summer. A U.S. Department of Agriculture report Monday afternoon also put frozen beef stocks in June at 416.7 million pounds, up 1% from May but down 10% from a year earlier. That was larger than what some analysts expected.
"This is the time of year where the demand is soft, supplies are large," said Don Roose, president of U.S. Commodities in Des Moines, Iowa. The USDA report "told us we had more beef in cold storage than we thought."
The futures market was also under pressure from a government report on Friday that showed producers placing more cattle in the feedlots than previously expected, suggesting slaughter-ready cattle supply would likely increase in the months to come. That report sent cattle futures to their lower limit in Monday's trade.
Futures initially bounced on Tuesday morning before heading south again. The most-active live cattle contract for October delivery fell 1.4% to $1.12775 a pound at the Chicago Mercantile Exchange, with traders weighing the prospect of more cattle later this year. The front-month August contract dropped 0.6% to $1.13175 a pound.
Traders will be watching Wednesday morning's online Fed Cattle Exchange auction to see if prices in this week's cash trade will be steady with last week's, particularly given the slide in beef prices and supply pressures. Some 2,100 head are for sale at the auction, lower than last time.
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Last week's cash trade popped unexpectedly, with sales rising to as much as $1.20 a pound live in various regions across the country.
Hog futures, meanwhile, rose. Analysts say the cold storage report was mixed for prices, with record-low frozen pork belly stocks coming alongside record highs in stocks of cuts such as loin and boneless ham.
CME August lean hog futures rose 1.3% to 81.45 cents a pound, while the most active October contract rose 0.6% to 66.85 cents a pound, considerably lower than current cash-market rates. Analysts said that could help limit losses for the time being.
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(END) Dow Jones Newswires
July 25, 2017 15:53 ET (19:53 GMT)