Cattle futures bounced on Friday after a week of selling that saw prices fall to multimonth lows.
The cattle market got a boost from a U.S. Department of Agriculture report released Thursday showing a drawdown in frozen beef stocks in commercial freezers in May. Beef stocks were at 412.9 million pounds, down 10% from April and 11% from the same time last year.
Continue Reading Below
That gave some respite to a market that has come under pressure as a seasonal slide in consumer appetite for beef and growing market-ready herds allow meatpackers to pay less for cattle on the cash market.
"Packers simply have enough committed cattle to slaughter for the next couple of weeks and beef demand has slumped so they are going to buy cattle cheaper," Troy Vetterkind, owner of Vetterkind Cattle Brokerage in Thorp, Wis., said in a note to clients.
Cash cattle prices were a "disaster" this week, said Dennis Smith of Archer Financial Services in Chicago. Packers paid $1.19 a pound for live cattle on Thursday, according to the USDA, down from $1.23 earlier in the week. That compares with averages of around $1.36 a pound two weeks ago.
Friday's turnaround was also helped by the USDA's announcement late Thursday that it would suspend Brazilian fresh beef imports over safety concerns. The impact was likely to be muted, said research firm AgResource, with only 5% of imports coming from Brazil so far this year. Restrictions by other countries on Brazilian beef could create an opening for U.S. exporters, however.
Live cattle futures for June delivery rose 0.5% to $1.192 a pound on Friday at the Chicago Mercantile Exchange, while August feeder cattle rose 1.1% to $1.4495 a pound.
Hog futures were mixed on Friday, with the front-month July contract inching higher while others sold off. CME July lean hog futures climbed 0.3% to 85.3 cents a pound.
A sharp drawdown in pork belly stocks to a record low in Thursday's USDA cold storage report could help continue to drive meat prices in the short term, analysts said, though the fall in overall pork stocks was less than expected. That would pressure futures for later months.
Pork prices, which have been carried recently by a surge in demand for bellies, climbed above $1 a pound this week for the first time in months.
Analysts are expecting the USDA's cattle-on-feed report at 3pm EDT Friday to show growing herds.
Write to Benjamin Parkin at email@example.com
(END) Dow Jones Newswires
June 23, 2017 15:07 ET (19:07 GMT)