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CME update: cattle futures backslide as slaughter rate stabilises

21 July 2020

US live cattle futures closed lower on 20 July, retreating from last week’s rally on signs that meat processors may be working through backlogs of market-ready cattle.

Reuters reports that though slaughter rates have returned to pre-COVID-19 levels, US cattle are heavier after staying in feedlots when processing plants closed this spring due to coronavirus infections among meat plant workers. According to Don Roose, President of US Commodities, the bigger cattle result in more boxed beef.

"The reality is bigger supplies are here still," Roose said. "Weights are still big in COVID uncertainty, so we pulled back."

Estimates from the US Department of Agriculture show 117,000 cattle slaughtered on Monday 20 July, up 1.7 percent from the same time a year ago.

Chicago Mercantile Exchange (CME) August live cattle futures settled down 1 cent at 102.275 cents per pound and October live cattle fell 0.5 cent to 106.375 cents.

CME August feeder cattle futures settled down 1.100 cents at 141.600 cents per pound.

Boxed beef prices have softened in recent weeks, signalling more supply as slaughter rates improve.

But fears of a resurgence of coronavirus outbreaks among consumers dampen traders' confidence in consistent demand.

Prices for choice cuts of boxed beef on 20 July afternoon gained $1.45 to $201.92 per cwt and select cuts added $0.81 to $191.12 per cwt, according to the USDA.

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