July 19, 2011

 

US cattle futures shut down amid unfavourable weather
 
 

US cattle futures shut down Monday (Jul 18) as markets fell largely and unfavourable summer weather threatened to affect consumer request for meat.
 

Cattle for August delivery closed down 0.75 cent, or 0.7%, to US$1.099 a pound in trading at the Chicago Mercantile Exchange.

 

CME October futures fell one cent, or 0.9%, to $1.150 a pound. Feeder cattle for August fell 0.8% to $1.346.

 

"The dangerous heat wave continues over the central US and is expected to expand eastward during the week," the national weather service said Monday. Heat index temperatures, which account for humidity, have surpassed 110 degrees Fahrenheit in some places.

 

Hot, humid weather often weighs heavily on the cattle complex since ranchers look to sell overheated animals hastily, which boosts supplies, even as consumers generally grill less meat and eat lighter meals. Cattle can stop gaining weight or even die under ultra-hot temperatures.

 

Futures also felt pressure from a broad-based selloff in stocks and commodities as investors again worried about debt issues in both the US and euro zone. The heat is pressuring cattle futures just as the beef industry enters a seasonal slowdown in meat sales. Consumers often buy less meat between July 4 and Labour Day as summer weather heats up.

 

A prolonged heat wave could eventually shrink supplies. Cattle lose much of their appetites as temperatures rise, which means many are smaller when they enter slaughterhouses. The need to sell animals quickly also means there could eventually be fewer supplies of slaughter-ready cattle.

"As the heat wave spreads across multiple states, keep an eye on hog and cattle weights and the resulting impact on overall protein supplies," said Steve Meyer and Len Steiner in a Monday CME Daily Livestock Report.

 

No bids or asking prices have been established yet in the cash cattle markets. Some analysts predict steady-to-weaker cattle prices this week on expectations of slower domestic demand for beef as the heat wave spreads across much of the country.

 

Prices last week in the Texas Panhandle were from US$1.10 to mostly US$1.11 a pound, down four to five cents a pound from the majority of sales the previous week. In Kansas, sales were from US$1.09 to US$1.11 a pound, compared with US$1.14 to US$1.145 the week earlier.

 

Sales in Nebraska last week were at US$1.11-1.115 a pound on a live basis and US$1.77-1.80, mostly US$1.78, a pound dressed. For the week, live prices were down mostly four cents a pound and dressed fell five to eight cents a pound.

 

USDA's midday beef price quote for choice grade carcasses was down 45 cents to US$180.43 a hundred pounds, and select beef prices fell US$1.21 to US$173.30 a hundred pounds. Beef sales were reported at 109 total loads.

 

The latest HedgersEdge packer margin index was plus US$15.75 a head, compared with US$21.70 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.