Cash cattle prices declined for the first time in several weeks, providing some relief to processor margins. According to The AG Center, southern cattle traded mainly at US$/cwt 255 last week, while northern sales were reported at US$/cwt 255–256 live and US$/cwt 403 dressed, representing declines of US$/cwt 3–5 from the previous week.
The report noted that the expiration of the June live cattle futures contract shifts market attention to the August contract, which is trading at a substantial discount to current cash prices. Live cattle futures have fallen for five consecutive sessions, reflecting declining confidence in the market's ability to sustain current price levels. During July, futures are expected to converge with the cash market.
Weekly slaughter was estimated at 440,000 head, down 100,000 from the previous week due to the holiday and 40,000 below the same week last year.
The AG Center said processors faced strong margin pressure throughout June but recovered some ground this week as cash cattle prices eased. While supplies of finished cattle are expected to remain tight, giving producers continued negotiating leverage, the report stressed that processor losses of around US$ 300 per head are not sustainable over the longer term.
