Chicago Mercantile Exchange live cattle contracts closed sharply lower on Thursday, pulled down by the stock market’s sheer drop caused by European deflation and Argentina default worries.
Wall Street investors dumped long positions across a broad range of commodities, including CME livestock futures, an analyst said.
Global economic jitters could undermine consumer confidence, which could hurt demand for U.S. goods including already high-priced meats, he said.
CME live cattle slid from the start, pressured by profit-taking on the final trading day for the month of July.
Equities’ retreat shook overly optimistic expectations about this week’s prices for slaughter-ready, or cash, cattle.
“‘Get me out’ knows no price levels, just fear,” said Oak Investment Group president Joe Ocrant.
Still, market bulls look for steady cash returns given rising wholesale beef prices, profitable margins and fewer animals for sale.
Spotty cash cattle bids surfaced in the U.S. Plains at $161 to $162 per hundredweight (cwt) versus $170 asking prices, said feedlot sources. Packers last week paid a record high $162 to $165 for animals.
Thursday morning’s choice wholesale beef price hit an all-time high of $264.52 per cwt, eclipsing Wednesday’s record. Select beef gained 54 cents to $261.37, the U.S. Department of Agriculture said.
Another volatile session may be in store on Friday as investors even up positions before the weekend while waiting for market-ready cattle to change hands.
August live cattle closed down 1.925 cents per lb to 157.925, and October 2.600 lower at 157.325.
Most CME feeder cattle contracts settled down the 3-cents per lb maximum daily price limit, weighed down by profit-taking and lower live cattle futures.
August finished 2.350 cents per lb lower at 220.675. September and October closed 3.000 cents lower at 221.200 and 221.025 cents, respectively.
Hogs pare early gains
CME hogs settled lower after sagging cash and wholesale pork prices erased earlier short-covering advances, traders said.
August finished 1.125 cents per lb lower at 118.025 cents, and October down 0.525 to 103.175.
The Thursday morning average price of hogs in Iowa/Minnesota plunged $3.61 per cwt from Wednesday, to $117.46, based on USDA data.
Government data showed the afternoon’s wholesale pork price at $128.52 per cwt, down $1.71 from Wednesday.
For now, packers have the upper hand by cutting kills and accepting heavier hogs, said AgFutures Managed Investments trader Tom Cawthorne.
Packers discounted pork at wholesale to stimulate retail buying at lower prices.
August led losers as traders sold it outright, or simultaneously bought deferred months, before the contract expires in two weeks.
Sell stops and fund liquidation pressured remaining months that might find relief from another possible short-covering attempt on Friday, a trader said.
Theopolis Waters reports for Reuters news service in Chicago