Cattle futures slumped on Tuesday, despite recent progress in a deal to reopen the Chinese market to U.S. beef.
The U.S. Department of Agriculture outlined on Monday requirements for American exporters to start selling meat to China, the world's fastest growing beef market, including the need to trace cattle back to their birth farm or point of origin into the U.S.
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Adapting to the rules "will involve a period of adjustment," said U.S. Meat Export Federation president Philip Seng. In the short-term, "meeting these requirements will add costs and this will mean that U.S. beef is priced at a premium compared to other suppliers."
Commerce Secretary Wilbur Ross said exports to China could resume in 10 days, though most analysts suggest few U.S. cattle fit the bill yet. Only around 2 or 3% of cattle on-feed in the U.S. would be eligible for export to China, said broker Troy Vetterkind in Thorp, Wis.
Futures traders largely moved past the announcement to focus on growing domestic supply. Prices in the negotiated cash trade for cattle are widely expected to slide this week as more market-ready cattle become available. Traders are looking to Wednesday's online Fed Cattle Exchange auction at 11a.m. ET for early signs of the week's price direction.
Live cattle futures for June delivery fell 0.7% to $1.275 a pound at the Chicago Mercantile Exchange, extending a slide that began on Monday. Feeder cattle futures also fell.
Hog futures rebounded from Monday's selling, however, with CME June lean hog contracts gaining 1% to 82.775 a pound.
High temperatures in the Midwest raised concerns about weight gains, with the hogs eating less in the heat. That could squeeze supply as retailers prepare for a July 4 grilling boost.
The cash trade is expected higher through much of this week as a result, though analysts say futures - which are at a premium to cash prices - are likely at or close to a top after gains in May.
"We're probably going to remain strong until July 4," said Mike Seery, president of brokerage Seery Futures in Plainfield, Ill., "but we've already had a tremendous rally."
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(END) Dow Jones Newswires
June 13, 2017 15:33 ET (19:33 GMT)