CME Cattle Futures Decline Amid Falling Beef Prices and US-China Tensions

CME cattle futures declined on Thursday due to dropping wholesale beef prices, limited cash cattle market activity, and growing US-China tensions. June lean hogs settled down 1 cent, while June live cattle futures finished 0.525-cent lower.

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Bijay Laxmi
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CME Cattle Futures Decline Amid Falling Beef Prices and US-China Tensions

CME Cattle Futures Decline Amid Falling Beef Prices and US-China Tensions

On Thursday, Chicago Mercantile Exchange (CME) cattle futures turn, lower, amid a combination of factors, including dropping wholesale beef prices, limited cash cattle market activity, and growing tensions between the US and China. June lean hogs settled down 1 cent at 97.725 cents per pound, while June live cattle futures finished 0.525-cent lower at 175.950 cents per pound.

Why this matters: The decline in cattle futures has significant implications for the US agricultural industry, which is a major contributor to the country's economy. Furthermore, the impact of US-China tensions on cattle futures could have a ripple effect on global trade and food prices.

The decline in cattle futures was attributed to a pattern of yo-yo pricing in wholesale beef prices, which has raised concerns about consumer demand for beef this summer. The US Department of Agriculture reported that choice beef cutout values were slightly higher on Thursday morning, but select beef cutout values were lower. This follows a report on Wednesday afternoon that showed values for both had turn, lower, amid sharply lower.

Cassie Fish, a livestock analyst and author of The Beef blog, stated, "The cattle market is just in the doldrums. You're seeing open interest back to the lows for the year, and speculators just aren't very excited trading cattle for their long positions."

Beef packer margins continue to be negative, according to HedgersEdge.com LLC. Investors are growing concerned about beef demand as the labor market cools, with the weekly jobless claims report from the Labor Department showing a rise in new claims for unemployment benefits to the highest level in more than eight months.

As of Friday, negotiated cash trading has been inactive in the Texas Panhandle due to very light demand, with noDaily, Market, News, Summaryreported. The last reported market was on Thursday, with live FOB purchases at $184.00. In other regions, such as Kansas, Nebraska, and the Western Cornbelt, negotiated cash trading and demand have been moderate, with prices ranging from steady to slightly lower or higher compared to the previous week.

The decline in CME cattle futures on Thursday was influenced by a combination of factors, including dropping wholesale beef prices, limited cash cattle market activity, and growing US-China tensions. With beef packer margins remaining negative and concerns about consumer demand for beef this summer, the cattle market continues to face comments.