CME cattle sink to November lows; hogs set contract high

Chicago Mercantile Exchange cattle futures tumbled on Monday as investors reduced risk and after the U.S. Department of Agriculture (USDA) last week confirmed producers placed more animals into feedlots in December, analysts said.

The USDA said cattle producers placed 1.96 million head in feedlots last month, up 6% from a year earlier and the highest for December since the agency began tracking placements in 1996. That exceeded analysts’ estimates for a 2.6% increase.

Placements provide a signal on the number of cattle that feedlots will market to slaughter plants about three to eight months in the future.

Producers placed more cattle in feedlots because there is a lack of pasture for grazing due to dry weather, said Dennis Smith, commodities broker for Archer Financial Services.

“The wheat pasture will not hold cattle,” Smith said.

Cattle futures came under additional pressure from selloffs in oil and equity markets, which were hit by investor concerns over the possibility of quicker-than-expected U.S. interest-rate hikes, analysts said. Wall Street eventually recovered.

CME April live cattle futures ended down 2.025 cents at 140.075 cents per pound and reached their lowest price since Nov. 5. March feeder cattle futures slid 2.050 cents to close at 161.250 cents per pound and hit their lowest price since Nov. 12.

Meatpackers continue to grapple with staffing shortages due to the surge in Omicron coronavirus infections, traders said, limiting production.

Beef processors slaughtered an estimated 115,000 cattle, up from 113,000 cattle a week ago and down from 116,000 cattle a year ago, the U.S. Department of Agriculture said. Pork processors slaughtered 455,000 hogs, up from 395,000 hogs a week ago and 489,000 hogs last year.

Tight supplies of pigs catapulted CME hog futures higher, brokers said. April lean hogs finished up 0.375 cent at 95.325 cents per pound and set a new contract high of 96.325 cents.

The wholesale pork carcass cutout value rose by $2.37 to $95.66 per cwt, the USDA said.