Cattle futures extended losses as traders continued to take stock of increases in supply expected early next year.
Live cattle contracts for October fell 0.9% to $1.08275 a pound at the Chicago Mercantile Exchange on Tuesday. Front-month September feeder cattle futures rose 0.1% to $1.50575 a pound while later months fell.
The ongoing weakness came after the U.S. Department of Agriculture said last week that feeders placed more cattle than expected in feedlots for fattening in August, suggesting that supplies of slaughter-ready cattle would increase early next year and depress prices. The agency also said that stocks of beef in commercial freezers rose 10% in August from a month earlier, well above expectations.
That prompted a selloff in cattle futures, with a number of contracts falling to their lower limits on Monday.
"The market looks to continue to push lower over the near-term," The Hightower Report said in a note to clients, adding the losses were more indicative of a correction than a negative trend.
When placements were accounted for by weight and state, said Larry Hicks, owner of CattleHedging.com, supplies of cattle should fall in the fourth quarter of this year.
High processing margins -- which exceeded $100 a head through September, according to the HedgersEdge Index -- would encourage meatpackers to pay more on the cash market to secure supply, Mr. Hicks said. That should help support cash prices the remainder of this year.
Analysts are looking to the online Fed Cattle Exchange on Wednesday morning for signs feedlots will build on last week's cash market strength to charge higher prices. Last week cattle sold for an average of $106.67 per 100 pounds at the auction, with prices rising as high as $109 later in the week.
Hog futures were mixed. The CME's front-month October lean hog contract fell 1.9% to 55.25 cents a pound, hitting a new low for the year, while latter months rose.
Cash and pork prices have struggled amid high slaughter numbers, which rose to a record 460,000 head on Monday, though wholesale pork inched higher on Monday and at midday Tuesday.
Analysts see little prospect of near-term relief in the hog market, though some expect prices to firm later this year as meatpackers work through slaughter-ready supplies.
Write to Benjamin Parkin at email@example.com
(END) Dow Jones Newswires
September 26, 2017 15:31 ET (19:31 GMT)