Cattle Futures: Tumble On Drop In Beef Prices,Packer Losses

US - Beef price weakness weighed on Chicago Mercantile Exchange cattle complex prices on Tuesday, with live cattle futures leading the downside.
calendar icon 28 March 2007
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Feeder cattle futures were also weaker as Chicago Board of Trade corn prices were mixed.

Nearby April live cattle slid 122 points to 96.82 cents a pound while most-active June fell 177 points to 93.35 cents.

June live cattle futures fell to their lowest levels since Feb. 21 with Tuesday's break.

"Two things stand out (Tuesday). One, the packer is losing money - anywhere from $20 to $25 a head, depending on who you talk to and how you compute it. Second, boxed beef prices are under pressure. The retail pipeline is pretty well stocked," said Don Roose, president, U.S. Commodities.

The U.S. Department of Agriculture said choice beef prices at midday were down $0.19 to $156.20. Select beef prices were off $0.41 at $147.07. The volume of loads sold as of midday stood at 83 for fabricated cuts and 24 for trimmings and grinds.

Roose said the gains the cattle market saw recently on the detrimental weather in the Plains are over and the current weather system is actually beneficial for cattle weight gain.

"We're back to good gaining weather, where cattle use grain more efficiently," he said.

Floor traders said Tuesday's break triggered sell stops, which added to the session's losses. In fact, Roose said momentum for cattle has turned negative, with June possibly falling another 400 points lower.

Estimated daily livestock slaughter for cattle was 123,000 head Tuesday. A week ago it was 125,000 head and last year's actual kill was 121,000 head.

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