U.S. livestock: Live cattle sink on profit-taking, technical selling

Lean hogs, feeder cattle mixed

CME February 2021 live cattle with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. cattle futures fell on Monday in a profit-taking and technical-selling setback amid concerns about weaker demand for cattle and beef, traders said.

Position rolling by funds, as they closed out long positions in the spot month and bought deferred contracts on the second day of the five-session “Goldman roll” period, continued to weigh on front-month futures.

Weakening cash cattle prices at feedlot markets anchored futures as sales this week are expected to be steady to likely lower than last week as ample supplies of cattle are available.

“It seems like with the amount of marketings that we’re seeing, the trade is nervous about that. That’s overhanging the market fundamentally,” said Mike Zuzolo, president of Global Commodity Analytics.

“It was pretty easy for the funds and some of the longs to take profit once some sell-stops were hit underneath the recent lows,” Zuzolo said.

Lingering concerns about weaker beef demand as coronavirus restrictions have shuttered many restaurants also weighed on cattle prices.

Chicago Mercantile Exchange (CME) February live cattle futures ended 1.075 cents lower at 113.4 cents/lb. (all figures US$).

Selling was triggered as the contract hit chart resistance at its 20-day moving average and prices fell below recent lows. The contract, however, held technical chart support at its 50- and 100-day moving averages.

CME feeder cattle futures ended mixed. Actively traded March futures were up 0.075 cent at 136.9 cents/lb. while deferred fell 0.05-0.35 cent.

Elevated feed costs, with corn hovering near 6-1/2 year highs, continued to anchor feeder cattle.

Lean hog futures were mostly higher on bargain buying and short covering, although the nearby February contract posted losses as funds rolled their long positions to deferred months.

February lean hogs fell 0.225 cent to 68.475 cents/lb., while deferred contracts were down 0.025 to up 0.5 cent.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.

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