Cattle futures fell on Monday after a government report showed a larger-than-expected uptick in supplies.
The U.S. Department of Agriculture said that feedyards placed 2.39 million cattle in their lots for fattening in October, a 10% increase from a year earlier and more than the 8% increase forecast by analysts.
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October's higher placement rate suggested that the cash market for slaughter-ready cattle would come under pressure in the first half of next year, when feedyards begin selling the fattened cattle to meatpackers.
The total number of cattle on-feed as of Nov. 1, at 11.3 million head, was the highest for the month since 2011.
Growing supplies pressured the futures market as traders attempted to anticipate cash price moves in the months to come. The front-month December live cattle contract fell 1.5% to $1.171 a pound at the Chicago Mercantile Exchange, while contracts for delivery next year were also lower.
The rate of cattle marketed--or sent to slaughterhouses--in October was enough to prevent a short-term buildup in supplies of fattened cattle, the Steiner Consulting Group said, given that cattle weights were at multiyear lows. Cattle marketing rose 6% from a year earlier, also in line with expectations.
Softer demand for beef ahead of the Thanksgiving holiday, when consumers typically choose other meats, also pressured prices. Wholesale beef fell $1.68 to $205.56 per 100 pounds as of midday Monday, after dropping $3 on Friday.
"Beef clearance was very slow, as expected, over the weekend with shoppers definitely geared toward the Thanksgiving table featuring turkey and ham," said Dennis Smith, a broker at Archer Financial Services.
Thanksgiving demand helped the hog market, however, with prices bouncing on Monday.
CME December lean hog futures rose 2.3% to 62.025 cents a pound, reclaiming many of last week's losses. Wholesale pork prices were also higher at midday Monday and on Friday.
Market observers expected the cash market for hogs to start this week under pressure as meatpackers lowered bids for hogs, continuing a downward trend that began after a peak in late October.
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(END) Dow Jones Newswires
November 20, 2017 16:14 ET (21:14 GMT)