CHICAGO, May 11 (Reuters) - U.S. live cattle futures closed lower on Monday, with some contract months falling their daily 3-cent limit on profit-taking amid signs the U.S. meat-packing sector was stepping up beef production, traders said.
Chicago Mercantile Exchange (CME) June live cattle futures settled down 1.975 cents at 92.675 cents per pound, after surging to a six-week high on Friday.
The August and October live cattle contracts fell the daily 3-cent limit, and limits will widen to 0.045 cents for Tuesday’s session, the exchange said.
August feeder cattle futures fell 4.275 cents to 132.675 cents per pound.
“The plants are coming back online, so beef supplies are going to start to increase. Therefore beef prices are going to start to decrease, so it’s time to take your money and run,” said Alan Brugler, president of Nebraska-based Brugler Marketing & Management.
The U.S. Agriculture Department on Friday said 14 meat plants that had closed due to labor shortages amid outbreaks of the coronavirus were in the process of reopening last week.
The USDA estimated Monday’s cattle slaughter at 86,000 head, matching Thursday’s tally as the largest kill since April 20, while Monday’s hog slaughter reached 357,000 head, a two-week high.
The increased slaughter pace should ease a backlog of animals, although it could also help lift cash cattle prices, Brugler noted.
Wholesale beef prices remained historically high, however. The choice boxed beef cutout rose to $467.81 per cwt, up $6.93 from Friday and up nearly $58 from a week ago, according to USDA. Retailers like Kroger and Costco have limited sales of some meat items, and margins for beef processors have climbed.
CME lean hog futures also declined on Monday, with the June contract settling down 1.425 cents at 60.275 cents per pound.
Traders await Tuesday’s monthly USDA supply/demand reports in which the government might revise its estimates for quarterly U.S. beef and pork production. (Reporting by Julie Ingwersen Editing by Sonya Hepinstall)