CHICAGO (Dow Jones)--U.S. live cattle futures were mostly lower Friday on follow-through selling after Thursday's sell-off.
Cattle for October delivery fell 0.025 cent to $1.189 a pound in trading at the Chicago Mercantile Exchange. CME December cattle fell 0.5 cent, or 0.4%, to $1.1893.
The complex continued to sell off after prices fell Thursday from continued soft fundamentals, including somewhat sideways beef prices and tempered interest from packers. Prices had hit technical points of overhead resistance, due in large part to buying by large investors, and some brokers said prices could sag for some sessions to come until beef prices signal firm demand.
"I think we are going to see a minor break in the futures and the cash until fundamentals justify trading $120" a hundredweight, or $1.20 a pound, said Troy Vetterkind, president of Vetterkind Cattle Brokerage. "That may take until the middle of October."
Futures prices had been anticipating rising demand for meat, including strong demand from export markets. But futures have risen more quickly than wholesale prices, and that means packers may pull back slaughter schedules until prices improve.
The latest HedgersEdge packer margin index per cattle is minus 60 cents per head, compared with positive $2.60 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.
Wholesale beef prices have been choppy on a daily basis. The U.S. Department of Agriculture said choice beef prices on Thursday rose 63 cents to $185.20 a hundredweight while select prices fell 49 cents to $173.05.
Exports of beef, meanwhile, continue to soar over last year, despite a recent downturn in shipments. The USDA recently reported that weekly exports were down nearly 9% over the previous week, for the week that ended Sept. 8. Year-to-date exports, meanwhile, stand at 551,209 metric tons, up 38.7% from the same period last year.
Cash cattle markets were quiet Friday morning after light trading Thursday afternoon had animals trading at mostly steady prices compared to last week.
Brokers expected trading on Friday to get underway midday or later, as packers and owners were still far apart in quiet bidding. Negative margins and talk of slaughter reductions could help packers, while light sales so far could help owners since some processors will still need supplies for next week.
Cattle sold last week from $1.17 to $1.18 a pound on a live basis in Texas and Oklahoma. The range in Kansas was from $1.16 to $1.18, with the majority at $1.18. In Nebraska, sales last week were from $1.17 to mostly $1.18 a pound live and mainly $1.87 a pound dressed.