U.S. livestock: End-of-month positioning pressures CME live cattle

Chicago / Reuters – Last Friday’s selling of Chicago Mercantile Exchange live cattle contracts carried over into Monday, led by sell-stops and position squaring on the last trading session of the month, traders and analysts said.

Some investors sold August futures and simultaneously bought deferred contracts while cautiously awaiting this week’s cash prices.

August ended 0.900 cent per pound lower at 112.000 cents per pound, and October was down 0.475 cent at 111.950 cents.

Bullish market participants believe profitable packer margins, and the expected seasonal bottoming out of wholesale beef values, may support cash prices later this week.

Contrarians said packers might avoid bidding up for cattle given current ample supplies and increased numbers ahead in the pipeline.

Last week market-ready, or cash, cattle in the U.S. Plains moved at $117 to $118 per cwt, down as much as $3 from a week earlier.

Investors await the sale of a small number of animals at Wednesday’s Fed Cattle Exchange.

Last week cattle there brought $117.50 to $118.25. CME feeder cattle traders bought the August contract and at the same time sold back months, reflecting firmer cash feeder cattle prices and weaker live cattle futures.

August feeders ended up 0.125 cent per pound at 146.175 cents. September finished 0.450 cent lower at 146.650 cents, and October was down 0.625 cent at 146.225 cents.

Hogs end lower

CME lean hogs settled lower, declining more than 11 percent for July, after record-large hog numbers during the month undercut cash prices, said traders.

Sell-stops and fund liquidation exerted more pressure on lean hog contracts.

August closed 1.100 cents per pound lower at 80.300 cents.

October ended down 0.475 cent at 66.025 cents, below the 200-day moving average of 66.250 cents.

Traders are monitoring wholesale pork belly prices that typically top out around early August as the summer bacon-lettuce-tomato sandwich season approaches – which is typically around the U.S. Labor Day holiday.

“The hog market needed to see the bellies at least appear to put in a top last week. If that’s the case, cash and futures markets will be priced accordingly,” said Rosenthal Collins broker James Burns.

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