Cattle futures fell on Thursday, giving back the previous session's gains as traders looked ahead to a government supply report.
December live cattle futures fell 0.5% to $1.1955 a pound at the Chicago Mercantile Exchange. Prices have closed within a cent of $1.20 every session this week.
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The futures market was under some pressure after prices in the cash market for physical cattle fell this week. Meatpackers mostly paid $119 per 100 pounds for slaughter-ready cattle on a live basis on Wednesday, with prices rising to $120.50 in some states.
That was $4 to $5 lower than a week earlier, though some analysts said the drop was a continuation of a readjustment after a recent spike in prices.
"The cash cattle trade continues to correct lower after the sharp and fast late October rally," said Troy Vetterkind, owner of Vetterkind Cattle Brokerage.
Mr. Vetterkind said large moves in cattle futures were unlikely ahead of the U.S. Department of Agriculture's monthly cattle on-feed report, due after markets close Friday.
The report, which gives an indication of current and future supplies of cattle destined for slaughterhouses, is expected to show continued expansion in numbers of cattle being fattened in feedlots.
Analysts surveyed by The Wall Street Journal expect the USDA to put the total number of cattle on-feed as of Nov. 1 at 5.7% above the same time last year. Cattle placed in feedlots in October, an indication of supplies when those animals reach their requisite slaughter weights in a few months time, likely rose 7.6%, according to the estimates.
Placements have exceeded pre-report expectations in nine of the previous 10 reports, according to Dennis Smith of Archer Financial Services. Futures markets have, in recent months, absorbed those figures without a significant drop in prices as traders hold that demand will be able to keep up with the extra beef.
Hog futures also fell. CME December lean hog contracts dropped 1.7% to 60.1 cents a pound.
Hog traders have supply concerns of their own. A recent tumble in corn prices on updated forecasts for a larger-than-expected harvest this year made it cheaper for farmers to continue expanding their pig herds, analysts said.
"The hugely available feed supply and low corn prices will keep expansion alive and well in the U.S.," Mr. Smith said.
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(END) Dow Jones Newswires
November 16, 2017 15:33 ET (20:33 GMT)