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U.S. feeders fall on fund selling, live cattle

U.S. feeder cattle futures ended lower on Thursday after a drop below key chart support triggered fund liquidation, analysts and traders said.

Traders also cited the weaker Chicago Mercantile Exchange live cattle market. Hog futures ended mixed.

CME feeder cattle slid more than one per cent as a lack of buyers allowed August and October to drift below their 40-day moving averages of 141.93 and 144.15 cents (all figures US$).

"The funds that bought them (feeders) have quit buying. Now they’re falling back to reality," A+A Trading broker Jim Clarkson said.

Spot August feeder cattle closed down 1.75 cents per lb, or 1.23 per cent, at 140.325 cents. September closed at 142.875 cents, down 1.6 cents or 1.11 per cent.

Feeder cattle drew further pressure from the lower live cattle market and as corn prices hovered around $8 per bushel, reducing feedlot demand for younger cattle.

CME live cattle dropped amid delivery anxiety that fuelled bear spreading, traders and analysts said.

Investors also expressed caution before the U.S. Department of Agriculture’s monthly cattle report on Friday.

Spot August closed down 1.2 cents, or 0.98 percent, at 120.85 cents per pound. Most-actively traded October ended down 1.1 cents, or 0.87 per ent, at 125.55 cents.

Investors predict cash cattle prices at least steady with last week’s $119-per-hundredweight (cwt) sales as grocers buy beef for promotions associated with the Sept. 3 Labour Day holiday.

Consumers also transition from grilling to cooking indoors as the weather turns cooler, a trader said.

Cash bids remained at $117-$118 with asking prices up to $124, feedlot sources said.

USDA on Thursday morning pegged the wholesale price for choice beef at $190.96 per cwt, up 44 cents from Wednesday.

Hogs mixed

Hog futures closed mixed with October underpinned by its discount to cash prices, traders said.

But packers recently lowered cash hog bids amid a supply buildup as temperatures moderate, causing hogs to gain weight sooner while increasing the amount of pork available to retail buyers.

Also, some hog farmers continue to liquidate their breeding stock as corn prices remain near record highs, severely impacting hog producer margins.

The government’s weekly slaughter data for the week ended Aug. 4 showed sows at about 62,800 head. It topped 61,000 head the previous week — the highest since the week of Dec. 10, 2011 when 67,700 were slaughtered.

October hogs closed up 0.025 cent, or 0.03 percent, at 75.625 cents/lb. and December ended 0.375 cent lower, or 0.51 per cent, at 72.9 cents.

— Theopolis Waters writes for Reuters from Chicago.

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