Cattle prices fell sharply Thursday on the New York Mercantile Exchange, as weak retail demand and excess supplies of heavy cattle caught the market by surprise.
Prices fell in a sharply deflationary environment, as the Commodity Research Bureau's index of commodity prices fell to 230.9, its lowest level in more than 2 1/2 years. A year ago, the index was at 280.6.
Retailers had been expected to be aggressive buyers in the cattle pit this week because many consumers will receive end-of-month pay checks and will be stocking up on groceries, said Chuck Levitt, a livestock analyst in Chicago with Shearson Lehman Bros.
But it appeared that grocers had bought all the beef they needed a week earlier, he said, and the absence of their buying put the cattle market into a tailspin.
Wholesale prices for beef carcasses, live animals in Texas Panhandle areas, and boxed beef all were under pressure Thursday, Levitt said.
"Their marketing strategy has been masterful," Levitt said of retailers.