Cattle Futures Fall on Higher Supply Outlook

By Benjamin ParkinFeaturesDow Jones Newswires

Cattle futures tumbled Monday on expectations of higher supplies early next year.

The U.S. Department of Agriculture said on Friday that feeders placed 3% more cattle in lots for fattening in August than a year earlier, while analysts had expected the rate of placements to fall by 3%.

Continue Reading Below

That pressured a market that had rallied in part on expectations of lower slaughter-ready cattle supplies early next year. It prompted heavy selling in cattle futures on Monday as traders revised their expectations.

December live cattle futures fell by their daily limit of 3 cents, or 2.6%, to $1.14425 a pound at the Chicago Board of Trade. The most-active October contract fell 2.1% to $1.09225 a pound.

Feeder cattle futures were also sharply lower.

The USDA's report was "a very negative surprise," said Dennis Smith at Archer Financial Services. Record-high fourth quarter production was likely to continue into higher output early next year too, he said.

In a separate report, the USDA said frozen beef stocks in August rose by 10% from a month earlier, also above analysts' expectations. That was the largest increase in August beef inventories in 15 years, said Ken Morrison, a trader and author of commodity newsletter Morrison On The Markets, in a note to clients.

The pessimistic outlook for cattle and beef supplies overshadowed higher cash-market prices last week. Meatpackers paid an average of $108.49 per 100 pounds on a live basis and $170.59 dressed, several dollars higher than a week earlier, amid a short-term supply pinch.

Hog futures bounced on Monday, finding support from higher pork prices at midday and as traders bet against the cattle market.

But the near-term outlook is expected to pressure prices, particularly in the cash market. Hog weights, slaughter numbers and pork production all increased last week.

CME October lean hog futures rose 1.1% to 56.325 cents a pound.

Write to Benjamin Parkin at

(END) Dow Jones Newswires

September 25, 2017 15:47 ET (19:47 GMT)