Chicago Mercantile Exchange live cattle futures closed lower on Thursday on selling fueled by the stock market’s sharp drop, which was caused by the U.S. Federal Reserve’s intention to curb its fiscal stimulus, analysts and traders said.
Funds and investors with assets in equities also took money out of a wide spectrum of commodity classes including gold, crude oil and CME live cattle, traders and analysts said.
“Agricultural futures were down hard early but closed well off lows,” said Hales Trading Co. president David Hales. “However, if the money flow out of energy and metals becomes a rout, will the agricultural sector be immune?”
June live cattle finished down 0.525 cent at 119.95 cents per pound, and August dropped 0.4 cent to 120 cents (all figures US$). Firm wholesale beef prices helped lift futures from the session’s lows.
The drop in CME live cattle prompted expectations for lower cash cattle prices. Cash cattle bids in the Plains were at $117 per hundredweight (cwt) versus asking prices of $120, said feedlot sources. Cash cattle last week moved at $120.
USDA on Thursday afternoon reported the wholesale price of choice beef, or cutout, up 32 cents from Wednesday at $199.30/cwt. Select cuts rose $1.19 to $185.88.
Investors are awaiting Friday’s government monthly cattle-on-feed report. Analysts expect the report to show fewer cattle placed in feedlots in May due to higher feed costs and better grazing pastures.
USDA will simultaneously release its monthly cold storage report, which will show beef and pork inventories in May.
Lower live cattle futures pressured CME feeder cattle. August feeders settled down 0.225 cent/lb. at 144.425 cents and September was down 0.25 at 146.75 cents.
Hogs mixed, discount vs. profit-taking
CME hogs closed mixed. The nearby July was lifted because of its discount to the exchange’s hog index, which was 103.87 cents/lb., traders and analysts said. July hogs settled up 0.275 cent/lb. at 100.25 cents. August ended down 0.1 cent, to 98.275 cents.
“We’ll continue to chase the index higher as long as cash prices hold up,” a trader said.
Government data showed the average hog price on Thursday afternoon in the closely-watched Iowa/Minnesota hog market at $100.78/cwt, down three cents from Wednesday.
Tight seasonal hog supplies could force processors to keep cash bids steady. But, pork demand could suffer at current price levels.
Thursday afternoon’s mandatory wholesale pork price report, or cutout, calculated on a plant-delivered basis, was at $106.73/cwt, down 25 cents from Wednesday, according to USDA.
— Theopolis Waters reports for Reuters from Chicago.