Live cattle futures turned down this week. Beef prices softened and hog futures continued dropping, which also seemed to carry over into the cattle market. At the same time, December cattle futures broke below chart support and the 20-day moving average near 140.00 cents per pound, thereby triggering additional selling and driving the contract down sharply from last week’s high at 144.72 cents to near 134.00 this week. December futures have retraced 62% of the rally from the Oct. 1 low at 128.10. Prices need to find support near 134.00 or the market risks retesting the October low.
The futures weakness along with lower beef prices is likely to result in lower cash trade this week. Cattle traded at mostly $138/cwt in the southern Plains last week and near $137 in Nebraska. Fed cattle prices may be in for some additional near-term weakness, but should recover into the late fall and winter as domestic beef demand improves on a seasonal basis.
Beef export demand has been weak this year. The most recent data for September show that beef exports were down 25% from a year ago. Year-to-date exports are down 13% from 2014. Exports to four of the five largest US destinations are down from a year ago. Exports to Mexico, Japan, Canada and Hong Kong are all lower. Only South Korea is higher. At the same time beef exports are down, imports are sharply higher, up 30% from 2014 so far this year. The strong dollar has impacted trade dynamics.