U.S. livestock: CME cattle futures extend slump

Hogs mixed after strong week

CME December 2021 live cattle (candlesticks) with 20-, 50- and 100-day moving averages (pink, dark red and black lines). (Barchart)

Chicago | Reuters — Chicago Mercantile Exchange (CME) live cattle futures closed lower on Friday, extending their slide for a sixth session on lacklustre cash cattle trade and falling wholesale beef prices, traders said.

CME October live cattle futures settled down 0.175 cent on Friday at 120.4 cents/lb. while the benchmark December contract fell 0.525 cent to end at 125.2 cents (all figures US$).

Feeder cattle futures closed narrowly mixed, with most-active November ending unchanged at 152.9 cents/lb.

Cash trade in market-ready cattle this week was roughly steady with recent weeks, with fat cattle trading at $121-$124 per hundredweight in the southern Plains.

Meanwhile, wholesale beef prices have been in retreat since late August. Choice cuts fell another $2.62/cwt on Friday, to $292.36/cwt, and select cuts fell $4.48/cwt, to $264.84/cwt, according to the U.S. Department of Agriculture.

“With beef prices weakening, the packers really have no incentive to pay up for cash cattle,” said Dan Norcini, an independent trader. “All the bargaining power is in the hands of the packers, and they are taking full advantage.”

On the hog side, CME lean hog futures closed mixed in a consolidation after rocketing higher this week on quarterly USDA data released Sept. 24 that showed smaller-than-expected U.S. hog supplies.

“There is still a spillover effect from that bullish quarterly hogs and pigs report. The funds are heavy buyers, using the bullish surprise in the report as the catalyst,” Norcini said, noting rising open interest in hog futures this week.

CME October lean hogs settled up 0.7 cent at 92.3 cents/lb. while the most-active December contract fell 0.225 cent to end Friday at 85.175 cents.

Still, for the week, December hogs gained 8.375 cents or 11 per cent.

“You’ve got good foreign (pork) export demand, and apparently good domestic demand as well, and you have fewer hogs,” Norcini said.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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