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CME update: cattle futures pull back on shaky demand

22 July 2020

US live cattle futures closed lower on 21 June for a second straight session after contracts reached more-than-four-month highs last week as meat packers continued to process surplus cattle.

Reuters reports that traders are concerned about the sporadic economic reopening of the United States. Multiple states are reporting spates of COVID-19 infections, leading traders like Kirk Dawson of Allendale Inc to worry that consumer demand for beef and pork will remain uneven despite the ramped-up slaughter pace.

"They're nervous about putting a lot of premium in the market because of demand uncertainty," said Dawson.

Estimates from the US Department of Agriculture (USDA) show 118,000 cattle slaughtered on Tuesday, 2.5 percent fewer than the same time a year ago.

Chicago Mercantile Exchange (CME) August live cattle futures settled down 0.425 cent at 101.850 cents per pound and October live cattle fell 0.250 cent to 106.125 cents.

CME August feeder cattle futures settled down 0.275 cents at 141.325 cents per pound.

Beef packer margins remain high, at an estimated $259.95 per head, though they have scaled back compared to early July, when margins topped $300 per head.

"The processors have been doing well, margin wise," said Dawson. "They haven't exactly been giving the stuff away."

Meanwhile, boxed beef prices remained locked in a recent range, with prices for choice cuts of boxed beef on 21 July trimming 83 cents to $200.91 per cwt and select cuts adding 67 cents to $192.26 per cwt, according to the USDA.

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