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CME update: futures and boxed beef prices weaken

09 July 2020

US live and feeder cattle futures weakened on 8 July alongside prices for boxed beef.

Reuters reports that the setbacks can be attributed to large supplies of cattle that are awaiting slaughter.

In general, commodity brokers report that the cattle weigh more than average. This is because as cattle remained on farm and on feedlots as meat plants closed earlier this spring due to coronavirus outbreaks among plant workers. The animals put on extra pounds as they awaited slaughter.

In the week ended 4 July, dressed cattle on average weighed 829 pounds, up from 804 pounds a year earlier, according to the US Department of Agriculture.

"You've got big supplies, big weights," a broker said.

Chicago Mercantile Exchange (CME) August live cattle settled 0.850 cent lower at 99.150 cents per pound. August feeder cattle fell 0.875 cent to 134.050 cents per pound.

Live cattle futures have retreated since nearing a two-month high on 6 July, while feeder cattle have pulled back after reaching their highest price in month than a month on Monday.

Prices for choice cuts of boxed beef on Wednesday declined 77 cents to $204.53 per cwt and select cuts slid $1.21 to $195.63 per cwt, according to the USDA.

Processors like Tyson Foods Inc and JBS USA are working their way through the cattle that backed up in feedlots, analysts said. Plants have since reopened, although many are working at reduced capacities because employees are absent and operators implemented social-distancing measures.

Meat companies slaughtered an estimated 120,000 cattle, compared with 121,000 a week ago; 118,000 a year ago; and up to 124,000 a day in March before the plant shutdowns, according to the USDA.

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