U.S. live cattle futures sag as cash disappoints

Chicago Mercantile Exchange live cattle finished lower on Friday, weakened by initial cash prices that fell short of expectations, traders and analysts said. A light number of cash cattle in Texas and Kansas moved at $132 per hundredweight (cwt), which was mainly steady with last week’s record-high price, feedlot sources said.
They said sellers elsewhere in the Midwest priced cattle at $134 and higher. Before Friday, improving packer margins and strong wholesale beef prices had underpinned cash prices.
Sufficient near-term cattle numbers and talk that beef prices might peak soon mitigated cash advances on Friday. “You see some hesitation in cattle when you get beef prices where they are,” said independent livestock futures trader Dan Norcini.
The struggling economy and some federal cuts to food stamps on Friday will hurt consumer spending for various goods, including certain beef and pork cuts, he said.
Friday morning’s wholesale choice beef price was $204.33 per cwt, down 84 cents from Thursday based on a light sales volume of 46 loads. Select cuts were at $189.58, off 50 cents, according to the U.S. Department of Agriculture.
U.S. beef packer margins on Friday were estimated at a negative $16.70 per head, compared with a negative $22.35 on Thursday, and a negative $41.35 a week ago, according to HedgersEdge.com.
Fund selling developed after December and February live cattle futures dropped below their respective 20-day moving averages of 132.68 cents and 134.26 cents. Losses in both contracts tripped sell stops. And funds that trade CME live cattle and hogs sold December futures and bought deferred months.
They moved long positions further out before similar moves expected to be made next week by followers of the Goldman Sachs Commodity Index (S&PGSCI). Funds that follow the S&PGSCI will shift their December long positions mainly into February and April.
That shifting will be for five days starting Nov. 7. Live cattle December finished 0.650 cent lower at 132.075 cents, and February closed at 133.475 cents, down 0.725 cent.
CME feeder cattle drew pressure from technical selling and lower live cattle futures. November closed 0.875 cent per lb lower at 163.500 cents, and January ended at 163.475 cents, down 0.200 cent.

CME hogs settled lower for a fourth straight day, led by fund liquidation and uneasiness about cash hog prices in the near term, analysts and traders said. December and February hog futures drifted below their 20-day and 10-day moving averages of 88.52 cents and 91.99 cents, respectively.
Declines ignited selling by funds and sell stops. Futures this week underwent a key downward technical reversal, EBOTTrading.com senior analyst John Kleist said. That drew attention to tepid wholesale pork demand, hog numbers picking up slightly and increased tonnage due to higher hog weights, he said.
While cash hog prices came in mixed on Friday, they were down in five of the past seven sessions.
And demand for pork items, other than hams, could come under pressure as retailers prepare to feature turkey and ham during the Thanksgiving holiday. Friday morning’s wholesale pork price was at $93.61 per cwt, down 44 cents from Thursday, according to the USDA. December hogs ended 0.825 cents lower at 88.350 cents, and February closed 0.800 cent lower at 91.225 cents.

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