Cattle Slump as U.S. Grocer Holiday Beef Buying Slows; Hogs DropElizabeth Campbell
Cattle futures fell the most in a week 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 also declined.
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 594,000 cattle in the first five days of the week, down 2 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 0.1 percent to settle at $1.27925 a pound at 1 p.m. on the Chicago Mercantile Exchange, the biggest drop since Aug. 9. Prices ended the week up 0.8 percent, the second straight gain.
Earlier today, 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. 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 0.7 percent to close at 86.725 cents a pound in Chicago. For the week, prices rallied 2.1 percent, the biggest gain in more than two months.
Feeder-cattle futures for September settlement rose 0.4 percent to $1.57675 a pound.