Chicago | Reuters — U.S. live cattle futures extended losses to a more than two-month low on Wednesday as investors liquidated long positions amid declining wholesale beef prices and expectations for weaker cash cattle markets, traders and analysts said.
Higher corn futures also boosted feed costs for fattening cattle, weighing on feeder cattle futures, while lean hogs rose to a fresh 2-1/2-year high.
“There’s a lack of any bullish or supportive news, so we continue to drift (lower),” Steiner Consulting Group analyst Altin Kalo said of cattle.
Chicago Mercantile Exchange August live cattle fell 2.2 cents to 113.55 cents/lb., after earlier falling to 113.075 cents, the lowest since April 26 (all figures US$). CME August feeder cattle finished 3.875 cents lower at 142.225 cents/lb., a roughly two-week low.
About 400 head of cattle were sold of 2,000 offered at an average price of $117.70/cwt at the online Fed Cattle Exchange auction, down from average sales a week ago of $119.51, according to the auction website.
The U.S. Department of Agriculture said after the close of futures trading that wholesale choice-grade beef eased 31 cents to $222.58/cwt while select beef cuts fell $2.12, to $205.32.
Beef prices have been on a downtrend since hitting two-year highs in mid-May. Retailer beef demand, which surges ahead of the outdoor grilling season, generally declines when consumers cook fewer roasts and steaks during the peak summer heat.
CME July hog futures hit a life-of-contract high of 92.575 cents before finishing at 92.05 cents, up 1.35. Several deferred contracts also reached lifetime highs and most-active August hog futures settled up 0.175 cent at 84.575 cents.
Gains in cash hog prices and higher prices for wholesale pork have enticed investors to make long bets in hog futures, which reached the highest levels since October 2014 on a continuous hog futures chart.
“Everyone is jumping on the bandwagon,” Kalo said.
USDA, after the close, said cash hogs in the top market of Iowa and southern Minnesota were up 10 cents at $87.96/cwt and the pork cutout was up nine cents at $104.41.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago.