U.S. live cattle futures opened lower on Tuesday as traders took a more cautious stance on the demand outlook following the July 4 holiday weekend, countering a broader commodity rally.
The August cattle contract was recently down 0.05 cents or 0.04% at $1.128 a pound in trading at the Chicago Mercantile Exchange. CME October cattle contracts fell 0.57 cents or 0.5%, to $1.191 a pound. August feeder cattle contracts fell 0.07 cents or 0.05%, to $1.404 a pound.
The moves reversed Friday's gains when cash prices for meat and slaughter-ready animals indicated better-than-expected demand through the Independence Day holiday.
Futures had a "good rebound last week, but we're still concerned about cattle in the big picture after the [holiday] weekend," said Rich Nelson, director of research at brokerage Allendale Inc.
Prices are also expected to find support after Chinese Premier Wen Jiabao on Tuesday reiterated government statements that maintaining price stability is a priority, fueling suspicions that China may buy more U.S. corn and other commodities.
Higher corn prices are often supportive of cattle futures since producers typically try to pass higher feed costs onto meat packers.
The cash cattle markets are expected to be quiet Tuesday, and feedyard managers and analysts said bids or asking prices are unlikely to be established until Wednesday.
Most of last week's cash trading was focused on Friday. Prices in the Texas Panhandle ranged from $1.12 to $1.13 a pound, up as much as 0.50 cents from the prior week. In Kansas, cattle traded at mostly $1.12 a pound, generally unchanged from the previous week.
Dressed sales in Nebraska Friday were reported at mostly $1.80, ranging from $1.77 to $1.81, steady to up two cents a pound from a week ago.
USDA wholesale beef prices Friday were mixed. The choice beef carcass composite value rose 19 cents to $178.60 a hundred pounds. Select was down 48 cents to $172.31 a hundred pounds.
The latest HedgersEdge packer margin index is plus $11.55 a head, compared with $13.25 the previous day. This is an estimate of packer returns on the cattle they slaughter and process expressed in the form of an index.
Tuesday's cattle slaughter is projected to be about 130,000 head.