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CME update: cattle futures drop before release of USDA Cattle on Feed report

22 June 2020

US live cattle futures fell on Friday as ranches contend with prolonged cattle supply bottlenecks despite slaughterhouses reopening.

Reuters reports that the USDA monthly Cattle on Feed report, which was released 19 June after the markets closed, showed May feedlot placements at 99 percent compared to the 2019 period, higher than analyst expectations of 96 percent.

The report shows that placements are returning to near normal levels. However, the sector has not yet addressed the backlogged cattle waiting to be placed after COVID-19-related slaughterhouse shutdowns.

That could have cattle futures facing bearish pressure on 22 June when markets reopen, said Rich Nelson, chief strategist with Allendale Inc.

"For cattle, it’s probably going to be July before we start hitting that backlog," Nelson said.

Chicago Mercantile Exchange August live cattle futures on Friday settled down 0.700 cent at 95.40 cents per pound. August feeder cattle futures settled down 0.425 cent at $132.55 cents per pound.

Processors killed an estimated 119,000 cattle on Friday, up from 115,000 cattle a week earlier, and equal to a year ago, USDA said.

Prices for choice cuts of boxed beef fell by $4.37 to $213.56 per cwt, while select cuts dropped $4.00 to $204.08 per cwt, according to the USDA.

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