Cattle Slump as U.S. Grocer Holiday Beef Buying Slows; Hogs Drop
Cattle prices fell on speculation that U.S. beef demand is slowing as grocers finish stocking up on meat before the Labor Day holiday on Sept. 2. Hogs dropped.
Two weeks before the holiday, buyers usually have all the beef and pork they will need, said Rich Nelson, the chief strategist at Allendale Inc. in McHenry, Illinois. The Hearth, Patio and Barbecue Association says Labor Day is the third-most popular day for outdoor grilling. Meatpackers processed 481,000 cattle in the first four days of the week, down 1 percent from a week earlier, government data show.
“We’re getting some of that buying squared up and finalized here this week,” with traders anticipating “slow buying by the retailer now that he’s put in his big orders,” Lawrence Kane, a senior market adviser at Stewart-Peterson Group, said in a telephone interview from Yates City, Illinois.
Cattle futures for October delivery declined 0.2 percent to $1.27875 a pound at 11:11 a.m. on the Chicago Mercantile Exchange.
Earlier, the price touched $1.291, the highest for the most-active contract since March 13, after Merck & Co. Inc. said that it was temporarily halting sales of Zilmax, a feed supplement that can help animals increase lean muscle.
Tyson Foods Inc. (TSN) said Aug. 8 that it was suspending purchases of cattle that use Zilmax after a “small percentage” of animals delivered to multiple locations were lame. That helped spark the biggest rally in cattle futures since January on speculation that animals would weigh less at slaughter, reducing beef supplies.
Prices erased gains today after traders digested the Merck news, according to Stewart-Peterson Group.
“You don’t change the number of cattle just because you use or don’t use a product,” Kane said. “It doesn’t have to be that significant in terms of tonnage.”
Hog futures for October settlement fell 0.3 percent to 87.05 cents a pound in Chicago.
Feeder-cattle futures for September settlement rose 0.2 percent to $1.57375 a pound.
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