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CME update: live and feeder cattle futures slip upon release of cold storage data

25 May 2020

US live and feeder cattle futures closed lower on 22 May ahead of the USDA Cattle on Feed report and after lacklustre cold storage data was released.

Reuters reports that the nearby CME live cattle futures contract lost 1.1 cents to close at 97.7 cents per lb. August live cattle ended 0.9 cent lower at 97.325 cents per lb.

Feeder contracts weakened as well – the August contract slipped 0.075 cent to 128.8 cents per lb.

The USDA reported a slight drop in cold storage meat supplies on 21 May. Beef dropped 2 percent from April but was still 14 percent higher than 2019.

"There was no big draw down in stocks, which was a little counter to what the trade was expecting," said Rich Nelson, chief strategist at Allendale Inc.

In its monthly report, the Agriculture Department said 1 May cattle on feed fell to 95 percent from a year ago, while April placements were 78 percent, outperforming trade estimates of 77.4 percent.

Nelson told Reuters that Friday’s report indicates the bottleneck in cattle supplies isn’t going away anytime soon.

"We're going to hold that backlog in place, all the way to September, when these low supplies start to drop off," said Nelson. "September through December, we'll have some relatively low supplies of cattle being offered."

The USDA reported the daily cattle slaughter at 102,000, a slight reduction on previous levels.

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