Live cattle futures prices ended lower Monday after an early round of selling based on a USDA report on feedlot populations triggered pre-arranged sell orders.
February live cattle recently traded at $1.0680 a pound, down 1.15 cents a pound, or 1.07%, on the Chicago Mercantile Exchange, while April was off 0.97c, or 0.86%, at $1.1170.
January feeder cattle was unchanged at $1.2635, while March was up 0.02c, or 0.02%, at $1.2557.
Since peaking at $1.1225 a pound on Jan. 18, for a 28 1/2-month high on active-month continuation charts, the February contract has lost 5.08% in value, bottoming Monday at $1.0655.
A U.S. Department of Agriculture report released Friday afternoon showing the number of cattle entering U.S. feedlots in December exceeded expectations by 2 percentage points
Troy Vetterkind, director of livestock analysis and trading for Vetterkind Cattle Brokerage, said that brought in some of the early selling. Many traders also see further weakness in cash prices this week after the market sagged 1 to 2 cents a pound, or $1 to $2 a hundred pounds, last week and traded at mostly $1.06 a pound, or $106 a hundred, he said.
That took prices down to trigger the standing sell orders, which added to the selling interest, the brokers said.
Vetterkind said many market analysts also considered the seasonally weak time of year for beef prices and said further weakness could come this week since sales volumes reported by the USDA last week were light to moderate at best. Traders feel product likely is backing up in coolers and that lower prices may be necessary by the end of the week.
Brokers said if beef isn't moving well, then packer buyers will be more challenging in their bidding process at the feedlots.
Don Roose, president of U.S. Commodities, said beef exports remain strong, however, and that these sales are supporting beef markets. Consumers also appear to be willing to pay more for the product, and until this changes, beef and cattle markets will remain strong.
The market found support at the 40-day moving average and the 50% Fibonacci retracement level. One analyst said support at these levels may be significant to traders who rely heavily on the chart patterns for their trading decisions. It could be enough to bring in extra buying on Tuesday on speculation that prices could move higher again.
Roose added that the market bottomed near last week's cash prices, indicating that investors saw futures as a fair value at that point. Many were willing to take a chance that cash may not weaken further this week as some think it might.
Feeder cattle ended narrowly mixed, torn between pressure from lower prices in the summer months of live cattle and lower corn prices, which would reduce the cost of feeding cattle to market weight.
The USDA at midday reported its composite wholesale carcass price for choice beef at $173.62 a hundred pounds, up $0.10 from Friday. For select beef, the price was up $0.27 at $170.91. The volume of sales totaled a light 59 loads of steaks and roasts and 79 of trimmings and coarse grinds.
Urner Barry's Yellow Sheet, a trade publication, at midday reported "average to slightly below average" weekend clearance of beef at the retail level. Cold temperatures throughout many regions of the U.S. seem to dampen beef sales.