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CME update: live cattle futures fall amid ongoing supply concerns

28 July 2020

US live cattle futures had a strong opening on 27 July but fell from session highs on technical selling and potential oversupply concerns.

Reuters reports that traders are still worried about the backup of market-ready cattle stemming from recent meat plant closures due to COVID-19 infections among plant workers.

Prices initially rose on 27 July after the release of the USDA cattle on feed report, which showed monthly on-feed numbers and marketings largely withing trade expectations. The 1 July on-feed supply from a record high in the same period in 2019.

But a biannual USDA cattle inventory report, also released on 24 July, showed a slight expansion of the US cattle and calf herd from a year ago.

"You had a lot of cross-currents between the cattle inventory and the cattle on feed," said Alan Brugler, president of Brugler Marketing & Management.

"The bearish factor that won the day was that, if you look at the cattle inventory report, you actually had a little expansion versus a year ago. It looked like we were in the downside of the cattle cycle, but because of the COVID backups we actually had higher overall numbers," he said.

Chicago Mercantile Exchange (CME) August live cattle futures settled down 0.900 cent at 100.425 cents per pound and October live cattle fell 1.275 cents to 103.825 cents per pound.

CME August feeder cattle futures dropped 2.700 cents to 139.350 cents per pound, while September feeder cattle dropped 3.125 cents to 139.625 cents per pound.

Both live and feeder cattle futures came under technical selling pressure.

Read more about this story here.



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