Chicago Mercantile Exchange live cattle futures fell nearly 1 percent on Thursday, pressured by fears of lower trades in cash cattle markets and positioning ahead of a government supply report due on Friday, traders said.
The U.S. Department of Agriculture was set to release its monthly Cattle on Feed report during Friday's session, one of only a handful of the reports that will come out during the trading day this year.
Analysts polled by Reuters expected USDA to show that placements of cattle into feedlots in April dropped by about 9 percent from the same month in 2017. Traders were squaring up their positions ahead of the report, which could trigger volatile swings in prices.
CME June live cattle was down 1.050 cents to 104.400 cents per pound and August cattle 1.025 cents lower to 101.775 cents. August feeder cattle fell 0.050 cent to 143.300 cents per pound, after earlier hitting a two-week high of 144.800 cents.
Beef packers have not bid aggressively for cattle this week, suggesting that they had relatively ample supplies for their slaughter needs. Some feedlots in Texas and Kansas were offering to sell cattle at about $115 to $116 per cwt, in prices that would be about even with cattle sales last week.
"No one has a good grasp on what cash (cattle) is going to do this week," one futures trader said. "It doesn't seem like packers really need cattle. I would be surprised they do anything before the (USDA) report."
Next week will see reduced cattle and hog slaughters as most meat plants shut down for Monday's U.S. Memorial Day holiday - closures that can result in a backlog in available animals.
"The bottom line is that it's extremely likely the cash steer market will be lower this week," said Archer Financial Services broker Dennis Smith.
However, the three-day holiday weekend is also the unofficial start of summer grilling season, typically resulting in increased demand for beef steaks and chops, hot dogs and other cuts. Beef packers, in particular, have taken advantage of comparative low cattle prices and meat prices to lock in big profits.
Lean hog futures were higher as they extended their recovery from recent multiweek lows. CME June hogs were up 0.225 cent to 74.825 cents per pound and most-active July hogs up 0.550 cent to 76.775 cents.