Chicago | Reuters — Chicago Mercantile Exchange live cattle futures fell more than one per cent on Wednesday on technical selling, softer cash cattle markets this week and worries about export demand for U.S. beef, traders said.
CME February live cattle fell 1.725 cents to settle at 136.575 cents/lb., just below the contract’s 50-day moving average near 136.7 (all figures US$). CME benchmark March feeder cattle futures ended down 1.925 cents, at 164.475 cents/lb.
Commodity funds hold a net long position in CME live cattle and lean hog futures, leaving both markets vulnerable to long liquidation toward the end of the year.
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China’s customs administration said it will allow imports of some Brazilian beef products to resume, ending an embargo in force since Sept. 4. Brazil had suspended shipments to its No. 1 customer China after confirming cases of atypical BSE.
“This might be a part of the reason that the cattle (futures) are seeing some stronger selling pressure today. Beef exports to China from the U.S. have been quite strong recently,” said Dan Norcini, an independent livestock trader.
Wholesale boxed beef prices extended their slide, with choice cuts down 46 cents at $260.26/cwt, the lowest since early April, according to the U.S. Department of Agriculture.
CME lean hog futures closed lower for a third straight session, pressured by news that China will raise import tariffs on most pork products next year.
CME February hogs settled down 0.75 cents at 79.325 cents/lb.
China had lowered its tariffs on frozen pork in 2020 as the country faced soaring meat prices in the aftermath of a devastating outbreak of African swine fever, a pig disease. But China has rapidly expanded domestic production, curbing its needs for imports.
“It’s telling what their current supply situation is with regard to pork. They may not be big buyers in the first half of next year,” said Altin Kalo, economist at Steiner Consulting Group.
On a supportive note for futures, U.S. wholesale pork values rose, with the carcass priced at $87.83/cwt, up $2.35 from Tuesday, USDA reported.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
