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The U.S. cattle market closed very low on Tuesday (June 30, 2020), with traders saying the Chicago Board of Trade (CBOT) would swallow profit margins for livestock producers under the pressure of an increase in corn futures.
“The rise in feed costs changes the dynamics in the industry. It cuts into profits - or in the case of hogs, it could exacerbate losses,” said Dan Norcini, an independent livestock trader.
Chicago Mercantile Exchange (CME) August live cattle futures settled down 0.200 cent at 96.275 cents per pound while August feeder cattle fell 0.650 cent to end at 132.850 cents per pound.
CBOT September corn futures rose nearly 4% on Tuesday and touched their highest in nearly three months after the U.S. Department of Agriculture said farmers planted 92.0 million acres of the feed grain this spring, which fell below a range of analyst expectations and was down 5 million acres from the agency’s March forecast.
“Your break-even equation says, ‘I have got to pay less for feeders, with corn going up the way it is,’” said Alan Brugler, president of Nebraska-based Brugler Marketing & Management.
Cattle futures found underlying support from signs that wholesale beef prices were stabilizing after recent weakness. Select beef cuts were up 76 cents at $201.47 per cwt in the USDA’s midmorning boxed-beef report, although the agency’s afternoon revisions showed an 81-cent decline, to $199.90 per cwt. Choice cuts ended down $1.39 on Tuesday afternoon, at $206.97 per cwt.
Meanwhile, the daily slaughter pace has returned to levels seen earlier this spring, before the coronavirus pandemic sickened workers at several U.S. packing plants, forcing some to shut down in April and May.
Source: Online/SZK
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