Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed lower on Monday, paring early advances, after funds sold or rolled their June positions and bought deferred months, traders said.
Funds trading in CME’s live cattle and hog markets shifted June long positions further back in a procedure known as the “roll” by followers of the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).
Monday was the third of five days for the S+PGSCI roll process.
Sellers outnumbered buyers despite futures’ discounts to last week’s prices for market-ready (cash) cattle.
Last week, cash cattle in the U.S. Plains fetched $161 to $164 per hundredweight (cwt), compared to $160 to $163 the previous week, industry sources said (all figures US$).
This week, more cattle are available after processors recently cut kills and drew from cattle contracted against the futures market, traders and analysts said.
Reduced slaughters slowed the flow of beef to wholesale meat buyers, they said.
Monday morning’s choice wholesale beef price was up $1/cwt from Friday, to $259.12/cwt. Select cuts jumped $1.53, to $248.35, the U.S. Department of Agriculture (USDA) said.
June ended 1.25 cents lower at 150.25 cents per pound, and August down 1.025 cents, to 148.8 cents.
CME feeder cattle May futures drew support from firm cash feeder cattle prices.
Remaining contracts were pressured by the exchange’s live cattle market losses.
May closed 0.9 cent/lb. higher at 216.775 cents, August down 0.2 cent to 217.425 cents and September 0.275 cent lower at 216.45 cents.
Hog futures sag
CME lean hogs settled weaker, partly due to funds who implemented the S+PGSCI roll, traders said.
“We’re getting the roll and that’s really what’s pressing the market,” said hog futures trader Bill Cipolla.
May hogs closed down 0.15 cent/lb., to 80.7 cents, and June 0.55 cent lower, to 84.275 cents.
May futures are nearly in line with Iowa/Minnesota cash prices heading into its Thursday expiration.
The government reported Monday morning’s average cash hog price in Iowa/Minnesota up $1.37 per cwt from Friday to $80.53.
To offset higher cash prices, processor curbed production which lifted wholesale pork values, a trader said.
Separate government data quoted the Monday morning’s wholesale pork price at $80.82/cwt, $1.25 higher than on Friday.
Back-month premiums’ to cash prices, and the exchange’s hog index for May 7 at 77.14 cents, deterred would-be buyers.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.