By Benjamin Parkin
Cattle futures were mixed on Thursday after a downturn in physical cattle prices continued to weigh on the market.
Meatpackers paid an average of $123.23 per 100 pounds on a live basis for slaughter-ready cattle on Wednesday, according to the U.S. Department of Agriculture. That was slightly lower than last week's average, despite expectations that prices would rise when this week's trade began.
Feedlots sold their cattle for $192.32 on a dressed basis, another way of calculating cash market prices. That was steady from last week.
The lower trend pressured the futures market. Recent government reports showed large numbers of cattle being fattened in feedlots, and analysts expect cash prices to run into further difficulty in the months to come as those cattle reach their requisite slaughter size.
Futures traders reacted by continuing a recent selloff in front-month futures contracts as they forecast ongoing pressure on near-term cash prices.
December live cattle futures at the Chicago Mercantile Exchange fell 0.4% to $1.22475 a pound, while February-dated contracts were also lower. Prices for later months rose.
Wholesale beef prices rose at midday Thursday, however. Beef prices have risen every day for over two weeks on the back of strong demand for the meat. Weekly beef export sales reported by the USDA were supportive, said Dennis Smith of Archer Financial Services; they were up 12% from the four-week average.
Hog futures were also mixed. The CME front-month December lean hog contract fell 0.6% to 63.175 cents a pound, while later months rose.
The December contract has fallen consecutively for over a week. Lower cash prices for hogs have cranked up pressure on the hog market. Cash prices inched higher on Wednesday, though they were expected to fall again on Thursday.
Weekly pork export sales were disappointing, analysts said.
Write to Benjamin Parkin at firstname.lastname@example.org