Cattle futures turned lower on Tuesday, erasing an early-week rally as traders refocused on large supplies.
A U.S. Department of Agriculture report on Friday showed a slowdown in the rate of cattle placed in feedlots for fattening in July, suggesting that current large supplies of slaughter-ready cattle will ease later this year.
After starting the week higher, futures fell on Tuesday as traders bet that prices across the cattle-and-beef market would continue in a slump while the industry works through existing supplies.
Most-active October-dated live cattle futures fell 2.1% to $1.061 a pound at the Chicago Mercantile Exchange. The market has traded in an established price range for much of August, and fell back into it on Tuesday.
Traders are looking to Wednesday morning's online Fed Cattle Exchange auction, at which around 1,800 head are listed, for cash-market direction. The auction often kicks off cash trade for the week, though no cattle traded at the previous two sessions as meatpackers and feedyards faced off over prices. Cash prices have fallen in recent weeks, and analysts say any sign of a bottom could help lift the futures market.
Hog futures also fell sharply as pork belly prices tumbled. Bellies fell over 9 cents to $1.2812 a pound as of midday Tuesday, extending losses from Monday. Futures traders are concerned that falling bellies could spark a chain reaction through the hog market.
CME October lean hog futures slid 2.3% to 60.225 cents a pound.
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(END) Dow Jones Newswires
August 29, 2017 15:40 ET (19:40 GMT)