U.S. futures for both live cattle and lean hogs were mixed on Wednesday as a broad selloff in commodities weighed on bullish momentum tied to forecasts for tighter supplies of meat next year.
Cattle for October delivery fell 0.2 cent, or 0.2%, to $1.204 a pound in trading at the Chicago Mercantile Exchange. December cattle traded higher by 0.2 cent, or 0.2%, to $1.2085 a pound. Feeder cattle for September were essentially flat at $1.3265 a pound.
The cattle complex took on a more negative tone by midday after some economic indicators pointed to slowing demand for raw materials, which in turn weighed on markets for commodities.
Durable-goods orders during August slipped 0.1%, the second drop in three months as manufacturers struggled with the tough economy, the U.S. Commerce Department said, dashing hopes for a 0.2% rise. The drop followed a 4.1% surge in July and a 1.1% decline during June.
Most commodities were lower on the day, including crude, which was down 3.5% to $81.50 a barrel.
The selloff in commodities brought a halt to the cattle complex's rally this week following a government report from Friday that showed much tighter supplies of cattle in feedlots than most investors expected. Cattle are typically raised on ranches and later fattened at feedlots before being sent to slaughter.
Cash cattle trading was quiet again Wednesday as meat packers and cattle owners remain far apart on bids and offer prices.
Beef processors were quoting $1.16-a-pound bids in Texas, western Oklahoma and Kansas, the same prices at which the bulk of last week's cash trading occurred. Cattle feeders are asking $1.20 a pound or higher for their animals this week since futures prices had rallied sharply following the Friday afternoon cattle-on-feed report.
Trading may not develop until Thursday or possibly Friday since processors purchased enough cattle last week to meet their needs for this week's slaughter. In addition, tight to negative processing margins may cause some packers to again restrict slaughter schedules late this week.
Some analysts predict that if futures hold at or near current prices, the cash cattle market will likely be $1.19 a pound, which would represent a gain of 3 cents a pound from a week ago.
Trading last week in Texas, Oklahoma and Kansas occurred at mostly $1.16 a pound. Sales in Nebraska were from $1.15 to $1.16 a pound live and from $1.82 to $1.84 a pound dressed.
The U.S. Department of Agriculture reported choice boxed beef prices at midday Wednesday down 41 cents at $182.64 a hundred pounds and select beef up 24 cents to $168.90 a hundred pounds on 199 total loads.
The latest HedgersEdge packer margin index was minus $13.40 a head, compared with minus $7.15 the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index.