Chicago Mercantile Exchange live cattle futures consolidated on Friday after setting a string on contract highs recently, while lean hog futures eased.
The cattle market looks ripe for a correction after futures rose this month on tightening U.S. supplies, brokers said. However, cattle inventories look even smaller than expected as ranchers have reduced their herds due to high feed prices and drought in the western United States, they said.
There were 11.7 million cattle and calves on feed for slaughter as of Feb. 1, down 4.1% from a year earlier, the U.S. Department of Agriculture said in a monthly report. Analysts surveyed by Reuters were expecting a 3.5% decline.
Placements of cattle in feedlots during January were 3.6% below a year earlier, the USDA reported. Analysts expected a 2.9% drop.
“Tighter cattle numbers will be a regular occurrence in 2023 and beyond,” Rabobank said in a note. “Drought and four years of herd liquidation have taken a toll.”
Thinly traded February live cattle futures settled up 0.050 cent at 165.200 cents per pound after reaching 165.675 cents, the highest on a continuous chart of the front contract since January 2015.
Most-active April live cattle closed 0.050 cent firmer at 165.375 cents per pound and set a contract high of 166.400 cents.
Wholesale boxed beef prices were mixed. Choice cuts were priced at $287.28 per cwt, down 63 cents from Thursday, according to USDA data. Select cuts rose $1.21 to $277.08 per cwt.
“We’ve seen the run-up in boxed beef fade a little bit,” said Matt Wiegand, commodity broker for FuturesOne.
CME March feeder cattle futures settled down 0.150 cent at 189.075 cents per pound after jumping to their highest price since August 2022.
CME April lean hogs ended 0.175 cent weaker at 86.025 cents per pound, while June hogs slipped 0.475 cent to 103.475 cents.