Cattle futures drop on high US beef supply outlook

Cattle futures fell for the second time in three sessions on speculation that US beef supplies will increase as more dairy cows are sent to slaughter.

About 86,700 dairy cows were sent to meatpackers as part of a producer-funded cull to help support milk prices, the National Milk Producers Federation said last week.

That's just more unnecessary meat on an already saturated market, said Lawrence Kane, a market adviser at Stewart-Peterson Group in Elmwood, Illinois.

Cattle futures for October delivery fell 0.8 cent, or 0.9 percent, to 88.325 cents a pound on the Chicago Mercantile Exchange. The most-active contract has dropped 17 percent in the past year as the recession curbed beef demand. Feeder-cattle futures for September settlement declined 0.7 percent to US$1.003 a pound.

Wholesale choice beef rose 0.1 percent at midday to US$1.4084 a pound, according to the USDA. The price is down 13 percent in the past year.