Chicago | Reuters –– Chicago Mercantile Exchange live and feeder cattle futures were mostly lower on Thursday as investors continued to liquidate their holdings amid expectations for more lower prices in cash cattle markets, traders and analysts said.
All feeder cattle contracts fell to lifetime lows, knocking out what had been their previous life-of-contract lows reached late in April. Weak trades at cash auctions triggered selling in feeders, with the U.S. Department of Agriculture noting light demand at one sale in Dodge City, Kansas.
Corn prices also were sharply lower but still near the highest levels since July. High animal feed prices boost costs for fattening cattle and typically weigh on feeder prices.
Front-month August feeders settled 0.625 cent lower at 139.625 cents/lb. (all figures US$).
Live cattle for August delivery settled unchanged at 117.275 cents/lb., trimming declines after earlier hitting a three-week low of 115.575.
The moves in futures followed light trading in southern U.S. Plains cash cattle markets of $123/cwt on Wednesday, deals that were about $5 lower than last week.
“We’re trading cash (cattle) $4 or $5 cheaper — there’s no reason for futures to be up and no need for funds to retain ownership,” CHS Hedging analyst Steve Wagner said of the futures selling. “We’re going to challenge that bottom until we take it out.”
Investors were monitoring August live cattle futures lows of 111.45 on May 26 and their contract low of 110.925 on April 22. Open interest in cattle has declined for months and reached the lowest since August 2015 as investors have closed out positions, CME Group data showed.
The opposite is true in lean hogs, with bullish investors adding to long bets and open interest the biggest since April 2014. Strong global pork demand, coupled with reduced supplies in China and seasonally tightening hog numbers in the U.S. enticed buying.
Hogs pared earlier losses to turn mostly higher on Thursday, driven in part by gains in cash hog prices in Iowa and southern Minnesota, traders said.
August lean hogs settled up 0.7 cent at 89.5 cents/lb., just below their contract high of 90.425 reached on Wednesday.
— Michael Hirtzer reports on agriculture and ag commodity markets for Reuters from Chicago.