Livestock futures ended lower Tuesday following Monday's limit up day in the cattle market. The market is now preparing for a seasonal lull that typically occurs after July 4th weekend as meat demand dies down.
CME live cattle for June was off 1.5% at $1.196 a pound and lean hogs for July fell 0.6% to 86.475 cents a pound.
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Dennis Smith at Archer Financial Services in Chicago advised clients to look for a seasonal high in August and October futures contracts either late this week or early next week.
"For now, people want their pork chops and their bacon. The million dollar question is, will they continue at these higher levels?" said Steve Wagner at brokerage CHS Hedging in Minnesota.
Mr. Wagner said the limit up move in cattle on Monday was short covering by traders who'd been awaiting a bearish signal beyond news that a large number of cattle are in feedlots.
Instead, they were seeing solid demand for boxed beef and solid exports, along with stockpiles dwindling in cold storage.
Cash prices will now determine what happens in the June contract. With cash prices last week at $119 to $124 and slow cash trade so far this week leading in to the expiry, a further slump in cash versus the futures could cause deliveries against the futures.
Archer Financials say most in the trade are expecting a steady to lower cash steer market this week. The firm said packers want to boost cattle weights and are slowing because they don't want to process light weight cattle.
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(END) Dow Jones Newswires
June 27, 2017 15:36 ET (19:36 GMT)