Chicago Mercantile Exchange (CME) lean hog and live cattle futures stabilized on Tuesday following sharp declines in the previous session, which were fueled by concerns over a potential U.S. recession, according to Reuters.
The recent drop in cattle and hog futures was seen as excessive, with analysts suggesting that the market overreacted. Despite the rebound, livestock traders remain cautious about possible further declines linked to economic uncertainties and potential stock market losses.
Live Cattle Futures
The most-active October live cattle futures ended 0.050 cents higher at 179.050 cents per pound, recovering slightly after a more than 4% drop over the past three sessions. This contract had reached its lowest level in nearly three months on Monday.
Matt Wiegand, a commodity broker at FuturesOne, noted the heightened caution in the market: “Everybody’s gun shy. A lot of people got burned with the hard washout.”
Feeder Cattle Futures
Feeder cattle futures continued to face pressure, with September futures closing down 0.675 cents at 240.575 cents per pound. This marks the lowest price for the contract since December.
The volatility in cattle markets has dissuaded ranchers from expanding their herds, which were previously reduced due to drought and high feed prices. Tyson Foods, one of the major U.S. beef processors, reported on Monday that producers are not significantly rebuilding their herds amid the market uncertainty.
Wiegand commented, “We have an inconsistent market with a lot of volatility,” reflecting the broader concerns in the cattle sector.
Hog Futures
Economic concerns typically impact hog futures less severely than cattle futures, as pork is generally viewed as a less premium protein compared to beef. Additionally, the hog market experienced less selling pressure on Monday due to the absence of significant long positions held by funds. October lean hog futures ended 0.675 cents higher at 76.400 cents per pound.
Additional Market News
In other news affecting the market, Argentina has reduced its beef export tax to 6.75% from 9% to boost sales to international buyers, according to a government decree. Meanwhile, China’s eastern Shandong province reported an anthrax outbreak, resulting in the closure of a beef cattle farm after five people were infected.
Overall, while the livestock markets showed some stabilization, traders remain vigilant amid ongoing economic and geopolitical developments.
