--Cattle futures drop off from fresh record highs amid demand
caution
--Feeder-cattle market under pressure from profit-taking
--Hog futures are mixed, supported in the front-month by gains
in wholesale pork
By Kelsey Gee
CHICAGO--Traders are booking profits on a surge in prices to
fresh record highs for U.S. live-cattle futures prices early on
Wednesday, as they assess the strength of demand for historically
pricy burgers and steaks.
October live-cattle prices are down 1 cent to $1.58675 a pound
at the Chicago Mercantile Exchange, after climbing to as high as
$1.6175 a pound earlier in the trading day, the highest price to
date for a front-month contract. December live-cattle futures are
also lower, recently shedding 1.025 cent to $1.6125 a pound.
"When you're looking at brand new highs like this, some traders
want to take their money and call it good" rather than betting
prices will climb further, said Christian Mayer, analyst with
Minneapolis brokerage Northstar Commodity.
Futures prices are also responding to pressure from producers
interested in selling cattle against live-cattle futures, Mr. Mayer
said.
The cattle market has gotten a boost from a sharp drop in the
cost of staple-feed ingredients like corn, which has made it easier
for feedlot operators to fatten cattle for longer, rather than
quickly selling them for slaughter. Record-high costs for
replacement animals have further incentivized the slower pace of
sales to processors, forcing them to bid more aggressively for
market-ready animals to fill retail beef orders.
But market participants are uncertain if retailers and export
buyers will continue to purchase wholesale beef at these prices, if
they're unable to pass on the higher costs to consumers. This
demand caution has restrained the number of head processors have
been willing to purchase in the cash markets for historically lofty
per-pound prices.
Most-active feeder-cattle futures for October recently slid 2.05
cents in price to $2.2570 a pound, after that contract, too, hit
new highs early Wednesday.
Hog futures are mixed, propped up in the front-month contract
after a jump in wholesale pork prices. October hog futures recently
advanced 0.72 cent to $1.0650 cents a pound. Other contracts are
mostly lower.
-Write to Kelsey Gee at kelsey.gee@wsj.com
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