U.S. live cattle futures fell in trading Thursday on weaker demand signals and as traders waited for the bulk of this week's cash trade to get started.
Cattle for October delivery fell 0.35 cent, or 0.3%, to $1.1367 a pound in trading at the Chicago Mercantile Exchange. The CME December contract fell 0.22 cent, or 0.2%, to $1.1567 a pound. September feeder cattle futures fell 0.15 cent, or 0.1%, to $1.323 a pound.
Futures felt pressure after beef and cattle traded hands on Wednesday at somewhat lower prices, albeit in very light volumes.
The U.S. Department of Agriculture reported choice boxed beef prices Wednesday afternoon down $1.78 to $182.79 a hundred pounds. Select beef fell $1.70 to $174.37 a hundred pounds. Cattle owners in Iowa and Nebraska sold a few thousand cattle for about $1.77 to $1.78 a pound dressed, which points to cash prices of about $1.12, or slightly lower than last week.
Traders could quickly ignore both reports, however, if cash cattle trading develops in more dominant markets at either higher or lower prices.
Investors are currently trying to gauge demand for beef after the Labor Day weekend, especially after beef prices fell more sharply than expected in recent days.
Analysts say the beef industry is facing a short-term sag in demand, tied to Labor Day sales and Hurricane Irene, even as supplies of slaughter-ready animals are rising.
Prices for beef fell sharply after meat packers finished filling orders for the Labor Day holiday, which typically kicks off the fall grilling season. Hurricane Irene has dragged further on demand as consumers across the East Coast grill less meat and dine out less frequently as they recover from the storm's lighter-than-expected damage.
After Labor Day, demand for meat is likely to grow as summer temperatures cool down and entice consumers to grill more meat. Traders have been cautious about bidding up futures, however, since supplies of animals are primed to rise through the autumn due to effects from a prolonged drought in the south, where ranchers have been liquidating herds for months. In fact, current prices for futures suggest cattle prices will rise about 1.5% between October and December.
Cash cattle trading may get underway before the end of the day Thursday as buyers and sellers might find agreement on a price early ahead of the Labor Day holiday weekend.
The latest bids were reported at $1.10 to $1.11 a pound on a live basis in the Texas Panhandle and mostly $1.11 in Kansas. Asking prices were are at mostly $1.14 a pound or higher.
In Nebraska, bids were reported at $1.77 to $1.78 a pound on a dressed basis and $1.11 a pound live. Asking prices are mostly $1.80 or higher dressed and $1.13 and up live, analysts said.
The latest HedgersEdge packer margin index was plus $40.90 a head, compared with $52.70 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.
Analysts predict Thursday's cattle slaughter to be about 127,000 head.