Chicago | Reuters — Most Chicago Mercantile Exchange live cattle contracts gained modestly on Friday after some investors sold February futures and bought deferred months prior to similar moves next week, said traders.
Monday begins the first of five days in which funds that track the Standard + Poor’s Goldman Sachs Commodity Index sell, or “roll,” their February long positions mainly into the April contract.
At the same time, the annual rebalancing by funds gets underway that could result in increased long positions in live cattle and lean hog futures.
February live cattle closed down 0.25 cent/lb. to 114.825 cents, and beneath the 20-day moving average of 114.95 cents. April ended up 0.05 cent to 114.2 cents and June up 0.025 cent, to 103.975 cents.
February live cattle futures were further pressured by the prospect for weaker cash and wholesale beef prices ahead, due to sufficient supplies and consumers paying off year-end holiday debt, according to CHS Hedging analyst Steve Wagner.
Furthermore, market participants are tracking weekend forecasts for a wintry mix in parts of the East Coast that could hurt meat demand in the region.
Packers this week in the U.S. Plains paid $116-$118/cwt for slaughter-ready, or cash, cattle that brought mostly $118 a week ago.
Friday afternoon’s choice wholesale beef price tumbled $2.74/cwt from Thursday to $198.81. Select cuts slipped 17 cents, to $193.22, the U.S. Department of Agriculture said.
Short-covering and firm back-month live cattle futures underpinned CME feeder cattle. January feeders ended up 0.075 cent/lb. to 128.325 cents.
Lower hog futures close
Profit-taking, technical selling and funds rolling February long positions pressured nearby CME lean hog futures, said traders.
They said the session’s higher cash and wholesale pork prices limited market losses.
February ended 0.9 cent/lb. lower at 63.975 cents, and below the 10-day moving average of 64.552 cents. April settled down 0.125 cent to 68.2 cents.
Friday afternoon’s cash hog price in Iowa/Minnesota averaged $54.82/cwt, 46 cents higher than on Thursday, USDA said.
Separate U.S. government data on Friday afternoon showed the average wholesale pork price, or cutout, dropped 56 cents/cwt from Thursday to $79.01.
Some farmers are avoiding opening up their barns to cold air to keep pigs warm, while reduced post-holiday ham business contributed to the weaker cutout, said traders and analysts.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.