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Live cattle futures ease, cattle on feed increase - CME

23 May 2022

Live hog futures firm

Chicago Mercantile Exchange (CME) live cattle futures were mixed on Friday, with the nearby contract firming while the most-active month eased, pressured by expectations of increased cattle placements in the US Agriculture Department's (USDA) monthly assessment, reported Reuters.

US feedlots held 2% more cattle on 1 May versus the same time a year ago, according to the USDA monthly Cattle on Feed report, released after the market close, above the 1.3% analysts expected in a Reuters survey. The increase marks four consecutive months of record feedlot inventories since the current data series began in 1996.

April cattle placements into feedlots were 99% of year-ago levels, higher than the 4.6% decline analysts predicted, while marketings were down 2%, in line with expectations.

"We're just placing more cattle on feed. The increase in placements of relatively light cattle suggests that the drought is having an effect and some producers are sending cattle to the feedlot rather than add more pounds outside of it," said Altin Kalo, economist at Steiner Consulting Group.

Dry conditions across the US Plains has parched pastureland, pushing cattle ranchers to costlier feed sources. Recent rains are thought to have improved grazing land conditions, though continued rainfall is needed, Kalo said.

CME June live cattle futures inched higher, adding 0.075 cents to 131.575 cents per pound, while the most-active August live cattle eased 0.475 cent to 131.550 cents per pound. CME August feeder cattle fell 1.275 cents to 163.925 cents per pound.

Beef packers were set to process 680,000 head this week, up 3.5% from the week prior, according to the USDA.

Prices for choice cuts of boxed beef firmed $1.08 to $262.78 per cwt, while select cuts eased $1.03 to $245.03 per cwt, the USDA said.

Lean hog futures firmed, with the nearby June contract adding 3.575 cents to 108.875 cents per pound. The most-active July contract closed up 2.025 cents at 109.000 cents per pound.

"Going into June and July, we're going to have tighter supplies," said Kalo. "Hot weather is going to start to take its toll on weights."

Hog slaughter eased to 457,000 head on Friday, although processors were poised to end the week with 2.414 million head slaughtered, up 1.6% from the week prior.

The CME's Lean Hog Index, a two-day weighted average of cash hog prices, added 29 cents to $100.37 per cwt.

Source: Reuters



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