Fund selling pulls down most U.S. live cattle futures

Aside from the April contract, Chicago Mercantile Exchange (CME) live cattle futures slumped Tuesday on late-session fund liquidation, traders and analysts said.

Futures losses mounted as investors took profits on the last trading day of the month.

Live cattle at the CME were poised to finish down less than one per cent for the month.

Thinly traded spot April, which expired at noon CT, closed at 128.4 cents per pound, up 0.7 cent (all figures US$). It drew support from last week’s stronger-than-expected cash cattle prices.

June futures, the new lead month, and August slipped below their respective 40-day moving averages of 122.16 cents and 123.07 cents, igniting fund selling.

Most-actively traded June ended at 121.9 cents, 0.65 cent lower. August closed down 0.525 cent to 122.55 cents.

Cash-basis cattle bids in Texas surfaced at $127 per hundredweight (cwt) against $130-$131 asking prices there and elsewhere in the U.S. Plains, feedlot sources said. Cash cattle last week moved at $128-$130.

“We’re going to play this through once April is off the board. June will move higher but that $130 cash level is a hard cap,” said Country Hedging broker Steve Wagner.

Fewer cattle for sale and steadily rising wholesale beef values with grocers gearing up for grilling features could lend cash support.

And cash bids developing so early in the week suggests to feedlot operators that packers are short bought cattle.

The U.S. Department of Agriculture’s Tuesday morning data showed the average wholesale choice beef price at $194.96/cwt, up 17 cents from Monday; select cuts climbed $1.49, to $187.71.

The weaker live cattle market and technical selling sank CME feeder cattle futures.

Still, CME feeder cattle finished up nearly three per cent for the month.

May feeder cattle closed at 139.55 cents, down 0.875 cents/lb. And August finished 0.975 cents lower at 148.9 cents.

Hogs rebound with cash

A seven-day stretch of higher cash hog prices helped CME lean hog futures shrug off Monday’s modest losses, analysts and traders said.

The average hog price on Tuesday in the most-watched Iowa/Minnesota market was $86.05/cwt, $2.35 higher than on Monday, USDA said.

CME hogs are poised to settle up around 12 per cent for the month. It would be their biggest monthly gain since 15.51 per cent for the month of December 2010.

CME June hogs settled 0.425 cent higher at 92.575 cents/lb. July hogs closed at 92.9 cents, up 0.4 cent.

“Cash is only as good as grocery story meat demand and packer margins allow it to be,” a trader said.

HedgersEdge.com calculated U.S. pork margins on Tuesday at a positive $4.50 per head versus a positive $7.25 on Monday and a positive $9.30 a week ago.

USDA’s Tuesday afternoon mandatory wholesale pork price, calculated on a plant-delivered basis, was $86.72/cwt, down $1.51 from Monday.

— Theopolis Waters writes for Reuters from Chicago.

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