Chicago | Reuters — Chicago Mercantile Exchange (CME) live cattle futures dropped for a fourth straight session on Wednesday, pressured by weaker cash cattle prices and seasonally rising supplies, traders said.
Technical selling further weighed on the market, sending the spot contract to the lowest level in nearly six weeks.
“We’re going to be coming into more market-ready (cattle) numbers in May and those numbers will just swell over the summer to levels well above last year,” said Cassie Fish, an analyst and author of industry blog The Beef.
“As of April 1, we will have the largest number of cattle on feed ever in the history of the industry,” she added.
CME April live cattle futures ended down 0.65 cent at 126.25 cents/lb., while the actively traded June contract fell 1.125 cents, to 119.6 cents (all figures US$).
April feeder cattle futures were 0.325 cent lower at 145.9 cents/lb. while May feeders were down 0.275 cent at 149.525.
Live cattle futures had rallied to contract highs last week as commodity funds expanded their long holdings amid worries about flooding and poor feedlot conditions in portions of the U.S. Plains.
But funds are now beginning to liquidate some of those longs as the cattle market tends to peak in mid- to late March.
More cattle were offered on showlists at feedlot markets in the U.S. Plains this week, allowing beef packers to buy cattle at lower prices. Some cattle traded in Kansas and Texas on Wednesday from $125 to $126, which was $2-$3 below prices paid by packers in that region last week.
Lean hog futures were mixed as the market weighed abundant hog supplies and strong prospects for a surge in exports to the world’s top pork consumer China, which has seen its domestic hog herd decimated by African swine fever.
CME April lean hogs ended up 1.6 cents at 81.325 cents/lb., while actively traded June hogs fell 0.525 cent to 94.8 cents.
Traders are awaiting the U.S. Department of Agriculture’s weekly export sales report early on Thursday, which could show large purchases by China.
USDA is also due to release its quarterly hogs and pigs report after the futures market close on Thursday. Analysts polled by Reuters expect, on average, that the U.S. herd expanded by two per cent in the December-to-February period.
— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.