CHICAGO, Oct 29 (Reuters) - U.S. live hog futures slid on Tuesday amid conflicting news about U.S.-China trade talks next month, traders said, while cattle futures continued to rally on funds’ adding to their positions.
So far, beef demand is showing no sign of waning, according to federal government data.
The wholesale choice beef cutout price saw a 5 cent per pound jump last week, the biggest weekly gain since the third week in August when the Tyson beef-processing plant shutdown in Kansas led to a scramble for supplies prior to the Labor Day holiday.
Meat packers slaughtered an estimated 117,000 head of cattle on Tuesday, slightly down from 119,000 both a week earlier and a year ago, according to U.S. Department of Agriculture data. Packer margins have remained strong, too.
But the trade - which has generally felt that there would be excess inventory of cattle going into early 2020 - has started to see signs of tightening supplies, said Rich Nelson, chief strategist for broker Allendale.
“We’re seeing that the total head (of cattle) is close to what it was last year, and they’re running at lower weights,” Nelson said. “So there’s more concern now about tight supplies going into the first quarter next year.”
Chicago Mercantile Exchange (CME) December live cattle contract added 0.250 cent to 116.85 cents per pound.
But feeder cattle futures slipped, with November futures down 0.250 cent at 145.475 cents per pound and the actively traded January contract closed unchanged at 141.600 cents.
Lean hog futures slipped as uncertainty over the U.S.-China trade war continued.
Reuters reported on Tuesday that an interim U.S.-China trade agreement might not be completed in time for signing in Chile next month as expected. However, that does not mean the accord is falling apart, according to a U.S. administration official.
Meat packers slaughtered an estimated 491,000 hogs on Monday, up from 488,000 a week earlier and 470,000 a year ago, according to USDA data. Packer margins have strengthened, too: $42.35 per head on Monday, up from $35.15 on Friday and $34.25 a week earlier.
Cash prices on Tuesday in the closely followed Iowa and Minnesota market were 31 cents lower compared to the previous data, according to the USDA.
CME December hogs ended the day down 1.325 cents at 64.325 cents per pound. (Reporting by P.J. Huffstutter in Chicago Editing by Leslie Adler)