Cattle futures closed lower in a volatile Monday session, as traders bet high beef prices would scare consumers away.
Live cattle futures for June delivery opened slightly higher before falling toward the lower limit of the daily trading band. June live cattle contracts closed 2.2% lower at $1.2245 a pound at the Chicago Mercantile Exchange. August feeder cattle futures closed down 1.4% at $1.42525 a pound.
Cattle futures have fallen despite a continued rally in wholesale beef prices, which rose 1.7 cents to $2.49 a pound as of Monday morning. Analysts said beef has risen so much it would make pork and poultry look like bargains in comparison.
"You've taken beef to a level where the retailer is not comfortable buying it," said Coby Tresner, an independent trader in Scottsdale, Ariz. "The cattle market is setting up for a one-way trip down."
Falling weekly cattle slaughter coupled with higher placements in commercial feedlots, Mr. Tresner said, suggested supply could increase just as demand tails off. Packers killed 609,000 cattle last week, down from 612,000 the week before.
Momentum Friday over the Trump administration's agreement with Beijing to reopen Chinese markets to U.S. beef exports didn't carry through the weekend. Analysts voiced skepticism that such a deal would result in concrete changes to the U.S. supply-demand balance in the near future.
Hog futures were mixed Monday. CME June lean hog contracts traded higher for much of the session before closing 0.9% lower at 77.25 cents a pound.
Analysts said lower pork prices, which fell to 82.2 cents a pound Monday morning, should help give that meat an edge over beef at the retail counter this summer.
But money flow out of cattle futures, as record-high open interest eases, also limits the upside potential for hogs futures.
"It's easier for cattle to drag hogs lower than hogs to drag cattle higher," Mr. Tresner said.
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(END) Dow Jones Newswires
May 15, 2017 15:11 ET (19:11 GMT)