U.S. cattle futures fell Tuesday, pressured by concerns about cash and wholesale beef markets and broader commodity selling.
Cattle for June delivery fell 0.5 cent, or 0.5%, to $1.1145 a pound at the Chicago Mercantile Exchange. The August contract fell 0.65 cent, or 0.6%, to $1.1387 a pound, while the October contract fell 0.5 cent, or 0.4%, to $1.1912 a pound
Futures for young cattle, known as feeders, declined as well. The May futures contract dropped 0.6 cent or 0.5%, to $1.3045 a pound, and the August contract fell 0.65 cent, or 0,5%, to $1.3417 a pound.
Cattle futures have slipped to six-week lows after hitting record highs in early April. Demand has become a growing concern as cost-conscious consumers look for cheaper dining options and backyard grilling gets off to a slow start because of unfavorable weather.
Futures are likely to leak lower until wholesale beef prices, which have been declining since early April, find a bottom, said Brian Hoops, president of Midwest Market Solutions.
"The consumer is still looking at rising gas prices," he said, explaining the drivers of lagging demand.
The U.S. Department of Agriculture on Monday afternoon reported choice boxed beef cuts were down 24 cents to $181.79 per one hundred pounds, while select boxed beef cuts were 32 cents higher at $176.38 a pound. Since peaking in early April, choice beef prices have fallen $10.17, or 5.3%.
Further pressure on cattle futures was likely to come from more general declines in commodities such as crude oil and the firming of the U.S. dollar, causing some investors to exit the market, said Mike Zuzolo, president of Global Commodity Analytics & Consulting.
Yet he added cattle futures could see some support from short covering, as traders who had sold contracts expecting prices to decline buy them back to book profits.
Cash cattle markets showed signs of weakening in early bidding this week. Some cash bids developed late Monday afternoon at $1.14 a hundred pounds live basis in Kansas and Oklahoma. Most cattle owners are wanting prices equal to last week's range of $1.16 to $1.17.
If live cattle futures reverse this week, cattle owners would be more encouraged to hold out for prices at or nearer last week's trading levels of $1.16 to $1.17 a pound live in Texas-Kansas and $1.87 to $1.88 a pound dressed in Nebraska. Trading may not become active until Wednesday or later.
Some analysts predict that cattle owners that had sold futures contracts to protect against price volatility may focus on the current discount in June futures contracts to current cash prices. That could prompt them to sell in the cash market and then exit their futures positions by buying them back, capturing a 3-cent to 4-cent margin.