Market Summary
Cattle and lean hog futures on the Chicago Mercantile Exchange (CME) experienced declines in Friday’s trading, with futures prices fluctuating within a narrow range. This drop was observed despite an uptick in wholesale beef prices.
Cattle Futures
Live and feeder cattle futures fell as funds liquidated their positions, resulting in new lows for some back-month feeder contracts. The October live cattle futures ended the day down by 2.45 cents, closing at 178.3 cents per pound. October feeder cattle futures dropped 4.95 cents to finish at 235.95 cents per pound. The decline was attributed to a combination of fund selling and expectations of increased slaughter numbers.
Wholesale Beef Prices
In contrast to the futures market, wholesale beef prices saw an increase. According to the U.S. Department of Agriculture, afternoon boxed beef cutout values rose by $0.51 to $317.45 per hundredweight (cwt) for choice cuts and by $0.56 to $302.59 per cwt for select cuts. The higher wholesale prices did not translate into stronger futures markets for cattle, highlighting a disconnect between spot market values and futures trading.
Lean Hog Futures
Lean hog futures followed the downward trend seen in cattle markets. October lean hog futures closed down by 1.425 cents at 75.075 cents per pound. The weakness in hog futures was linked to struggling wholesale prices and concerns about the strength of the market. Darin Fessler from Lakefront Futures noted that the hog market’s performance is closely tied to the strength of the cattle market, and current conditions make it challenging for hogs to show strength.
Consumer Behavior and Market Pressures
Traders are observing shifts in consumer behavior, with high prices driving bargain hunting and a shift towards lower-priced alternatives. The potential for reduced consumer spending on beef and pork, coupled with inflationary pressures, is contributing to market volatility.
Additional Factors
Traders are also monitoring news regarding a larger-than-expected U.S. bird flu outbreak in dairy cattle and potential USDA plans to expand bird-flu testing of beef entering the food supply. These factors may influence future market dynamics and consumer confidence.
Summary of CME Futures Prices
October Live Cattle: Down 2.45 cents, closing at 178.3 cents per pound
October Feeder Cattle: Down 4.95 cents, closing at 235.95 cents per pound
October Lean Hogs: Down 1.425 cents, closing at 75.075 cents per pound
