CHICAGO (Dow Jones)--U.S. live cattle futures fell Monday as traders squared books after last week's strong cash prices gains.
Cattle for August delivery fell 0.12 cent, or 0.1% to $1.1777 a pound in trading at the Chicago Mercantile Exchange. The CME October cattle contract was down 0.25 cent, or 0.2%, to $1.17926 a pound. August feeder cattle futures fell 0.1 cent, or 0.1%, to $1.3572 a pound.
The cattle complex felt some pressure after last week's strong prices for both cash cattle and wholesale beef as some traders squared books and booked profits from long positions. Cash prices last were generally $1.15 to $1.17, or about 2 cents to 4 cents higher than the week before, and some brokers were cautious that cash markets would remain flat after last week's surge. The August contract expires at month's end and cash prices typically converge with futures as a contract nears expiration.
Cattle futures and cash prices both were resilient last week even as markets worldwide gyrated wildly on worries that a debt crisis in Europe and a weakening U.S. economy could spiral out of control. The August contract rose nearly 4.5 cents a pound as demand for U.S. beef, especially from foreign markets, remains at historically high levels.
The rallies in beef and cattle prices suggest economic jitters have not yet affected consumer demand for beef, which costs more than many other kinds of meat. "Plummeting consumer sentiment numbers and increased savings rates have not yet been felt in the beef marketplace," said Ryan Turner, analyst at FCStone.
Futures also appeared to feel pressure Monday from a recall in ground beef that the U.S. Department of Agriculture announced Friday. Kansas meat packer National Beef Packing Co., in Dodge City, Kansas, recalled 60,000 pounds of ground beef that are contaminated by E. coli bacteria.
The Plains cash cattle markets will be quiet Monday and likely through the first half of the week following active trading last Thursday. Processors have enough cattle available so they may not need to buy again until late this week.
Meanwhile, buyers and sellers will be assessing this week's showlists, or number of animals offered for sale, along with beef demand ahead of the Labor Day holiday.
Slaughter this week a year ago was about 671,000 head, up from nearly 645,000 the previous week. Some analysts look for a modest increase in this week's slaughter compared with 661,000 last week. Others said processors may hold the line on slaughter, especially if wholesale beef prices do not keep pace with gains in the cash markets and result in tightened margins.
Sales in Texas/western Oklahoma and Kansas last week were at mostly $1.16 a pound on a live basis, up three and four cents a pound respectively from the previous week.
In Nebraska, dressed sales last week were at $1.84 to $1.85 a pound, up five to seven cents a pound from previous week. Live sales there ranged from $1.155 to $1.17 a pound.
The U.S. Department of Agriculture reported choice boxed beef prices Friday up $1.78 to $179.81 a hundred pounds and select up $2.46 to $176.53 a hundred pounds. Choice hit a 3 1/2-week high and select a one-month high.
The latest HedgersEdge packer margin index was plus $24.45 a head, compared with $28.70 the previous day.
Monday's cattle slaughter is projected to be about 126,000 head.