CME cattle futures rally in turnaround from slide last week

By Tom Polansek

CHICAGO, Sept 9 (Reuters) - Chicago Mercantile Exchange live cattle and feeder cattle futures rallied on short covering on Monday, analysts said, as the markets recovered from a slide last week.

Higher-than-expected U.S. boxed beef prices and strength in the stock market helped to support gains, after losses last week were overdone, analysts said. Some traders had expected a bigger drop in boxed beef prices as the summer grilling season wraps up and high meat prices threaten demand.

"So far the boxed beef has not been dropping sharply like some feared," said Don Norcini, an independent trader.

"A lot of bad demand side news has already been baked in."

Select cuts of boxed beef jumped by $3.94 to $300.06 per hundredweight on Monday morning, the U.S. Department of Agriculture said. Choice cuts of boxed beef rose by $0.20 to $309.61 per hundredweight.

CME October live cattle futures increased 1.75 cents to 176.925 cents per pound. October feeder cattle futures climbed 3.775 cents to 234.725 cents per pound.

Beef processors are monitoring cattle inventories after the U.S. herd in 2024 dropped to its lowest level in decades. Dry weather prompted producers to send more animals to slaughter in recent years, with tight supplies hurting margins for beef processors such as Tyson Foods.

A recovery in cattle supplies will likely occur closer to 2027 than 2026, and Tyson will face macro struggles in its beef segment through at least 2026, Barclays said in a report.

"If consumer wallets continue to tighten or promotions begin to dissipate, shoppers will likely forgo the more expensive beef in favor of cheaper proteins," Barclays said. "We expect a bulk of beef sales to face headwinds."

In CME's lean hog market, October futures slipped 0.7 cent to 78.80 cents per pound.

Traders are anticipating that cooler autumn weather and newly harvested corn is going to boost U.S. hog weights, Norcini said.

"There does not appear to be any shortage of pork looming ahead," he said. (Reporting by Tom Polansek; Editing by Krishna Chandra Eluri)