Hog and cattle futures fell to two-week lows meat on speculation that processors will cut production in advance of the U.S. Independence Day holiday.
Some meatpackers may run fewer hours this week before the July 4 holiday, and grilling demand may ebb through July and August, said Rich Nelson, the director of research at Allendale Inc. in McHenry, Illinois. Yesterday, wholesale-pork prices fell to a one-week low, and choice beef has dropped 5.4 percent this month.
For pork, “we’ve got maybe three plants saying they won’t run on Friday, which is bearish by itself, but the Monday-through-Thursday pace this week doesn’t look like it’s going to make up for that,” Nelson said. “Typically, demand slows right after the 4th of July because you don’t have anything lined up until Labor Day.”
Hog futures for August settlement fell 1.225 cents, or 1.5 percent, to 80.95 cents a pound on the Chicago Mercantile Exchange. Earlier, the price touched 80.65 cents, the lowest level since June 14.
Cattle futures for August delivery dropped 0.925 cent, or 1 percent, to 88.75 cents a pound. The contract earlier sank to 87.9 cents, the lowest price since June 15. Feeder-cattle futures for August settlement declined 1.1 cents, or 1 percent, to $1.12875 a pound.
Meat demand may rebound as retailers stock up a few weeks before the U.S. Labor Day holiday on Sept. 6, when many Americans grill outdoors, Nelson said. Demand for meat for grilling tends to wane in July and early August as temperatures peak in the U.S., he said.
Lower U.S. equities and a higher dollar also pressured commodities including livestock futures today. The Standard & Poor’s 500 Index touched the lowest level since November, and the dollar climbed as much as 0.8 percent against a basket of six currencies, eroding the prospects for U.S. meat exports. The Reuters/Jefferies CRB Index of 19 commodities plunged the most since last August.
“The stock market is a concern right now, with demand being the biggest driver,” Nelson said.