Chicago | Reuters — Chicago Mercantile Exchange live cattle contracts settled lower following Friday’s volatile session, stirred by funds that sold February and bought deferred contracts in accordance with the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI), said traders.
Friday was the first of five days of the S+PGSCI “roll” process.
Simultaneously, some index funds bought CME livestock contracts as part of their annual rebalancing of commodity holdings.
February live cattle closed 0.65 cent/lb. lower at 132.875 cents, and April ended down 0.475 cent, to 133.825 cents (all figures US$).
Expectations that upward-trending wholesale beef values might soon top out, and uncertainty regarding prices for unsold cash cattle, kept investors on the defensive.
So far, market-ready (cash) cattle in Nebraska sold at $132 to $133/cwt, down $1 to $3 from last week there, according to feedlot sources. They said Kansas and Texas cash bids stood at $133 against $138-$140 asking prices.
Friday morning’s wholesale choice beef price was up 64 cents/cwt from Thursday, to $231.23. Select cuts rose 70 cents, to $224.59, based on U.S. Department of Agriculture data.
“I’m sitting on my hands after getting whipsawed by so many market issues, including the slowdown in China’s economy that’s still hanging over the stock market,” a trader said.
Fund liquidation, firm corn prices and weak live cattle future’s sank CME feeder cattle contracts. January closed 4.4 cents lower at 159.425 cents.
Hogs settle generally weak
Most CME lean hog months ended moderately lower on Friday.
Traders sold deferred contracts and bought February with the view that wintry weather in parts of the Midwest might slow the movement of animals to market.
Spot February finished up 0.3 cent/lb., to 59.85 cents, April ended 0.375 cent lower at 65.225 cents and May closed down 0.225 cent, to 73.1.
Packers in Iowa/Minnesota on Friday morning paid $50.79 for hogs, down 50 cents from Thursday in light volume.
Meanwhile, wholesalers bought pork at $70.77, 99 cents higher than on Thursday, driven by increased costs for all categories, based on USDA data.
Compelled by their still highly profitable margins, packers may raise cash bids early next week especially if weather becomes an issue, a trader said.
He said supermarkets are eying cheaper pork as “wholesale beef prices itself out of the market.”
— Theopolis Waters reports on livestock markets for Reuters from Chicago.