Cattle Herd Report Hurts Futures Prices

A government report showing a larger-than-expected U.S. cattle herd knocked cattle futures prices to the mat Thursday on the Chicago Mercantile Exchange, but analysts were skeptical of the report’s accuracy.

On other markets, cotton futures prices fell sharply, grains and soybeans were mixed, precious metals futures declined, and energy futures were mixed.

Prices for all cattle futures except the February live cattle contract plunged the permitted daily limit of 1 1/2 cents at the opening bell and stayed limit-down for the rest of the session. The contract for February delivery of live cattle settled 1.40 cents lower at 73.97 cents a pound while the near-month feeder cattle contract, for delivery in March, settled at 82.92 cents a pound.

Pork futures prices fell in sympathy with the cattle market. Live hogs finished .50 cent to 1.05 cents lower with February at 41.90 cents a pound; frozen pork bellies were .12 cent to 1.13 cents lower with February at 37.57 cents a pound.

The sell-off was triggered by Wednesday’s semiannual USDA cattle inventory report, a head count of the nation’s cattle herd. The USDA reported that there were 99.5 million cattle and calves in the United States as of Jan. 1, only a few thousand fewer than the previous year.

The industry consensus expectation was for the herd to total fewer than 98 million cattle. The USDA report implied that after 6 years of thinning cattle numbers, producers were starting to rebuild their herds.

But many analysts said they did not believe the report, especially its implication of an extremely high birth rate in the second half of 1988.