US hogs set contract lows - CME

Cattle futures sink to June lows
calendar icon 24 October 2023
clock icon 2 minute read

Chicago Mercantile Exchange (CME) cattle futures plunged to four-month lows on Monday under pressure from bigger-than-expected placements of the livestock into US feedyards last month, reported Reuters.

Lean hog futures set contract lows.

The US Department of Agriculture, in a monthly report issued after trading ended on Friday, said placements of cattle in feedlots during September totaled 2.21 million head, up 6.1% from a year earlier. Analysts on average expected a 0.8% increase.

As of Oct. 1, there were 11.6 million cattle in feedlots, up 0.6% from 2022. Analysts estimated a slight decline from last year.

"The trade was just overall not expecting to see those numbers," said Austin Schroeder, analyst for Brugler Marketing & Management.

CME December live cattle settled down 6.275 cents at 178.350 cents per pound and hit its lowest price since June 26 at 178.175 cents. February live cattle tumbled by the daily exchange-imposed limit of 6.75 cents to 180.975 cents per pound and touched its lowest price since June 22.

January feeder cattle also hit their lowest price since June 22 and ended down 7.35 cents at 235.7 cents per pound.

After the sell-off, CME on Tuesday will temporarily expand daily trading limits to 10 cents from 6.75 cents in live cattle and to 12.25 cents from 8.25 cents in feeder cattle.

The markets still have a bullish longer-term outlook after drought and high feed costs caused ranchers to reduce their herds, Schroeder said.

"We're not building back herd numbers just yet," he said.

But the bigger-than-expected cattle placements likely have market participants rethinking the supply outlook for late winter and early spring 2024, Steiner Consulting Group said in a note.

In the hog market, December futures settled up 0.175 cent at 66.175 cents per pound after setting a contract low of 65.4 cents on Friday. The February, April and May lean hog contracts set new lows on Monday.

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