Chicago | Reuters — Lightly-traded Chicago Mercantile Exchange feeder cattle futures finished down their three cents per pound daily price limit on Tuesday for a fourth day in a row following sharply lower cash prices, traders said.
Fund selling, sell stops and CME live cattle’s subsequent limit-down settlement further pressured feeder cattle contracts.
The inability of packers to sell beef at wholesale weighed on deferred live cattle contracts, which influenced feeder cattle market selling, traders and analysts said.
January and March closed at 219.6 cents and 215.25 cents, respectively (all figures US$).
Limit-down live cattle
CME live cattle also ended down the three-cents/lb. price limit on lacklustre beef sales and lower cash price expectations, traders said.
December and February respectively closed at 158.975 cents and 158.75 cents.
Poor packer margins and four straight days of market losses suggest cash prices may decline at least $1 per hundredweight (cwt) from last week’s mostly $162 to $164 sales, a trader said.
Packing plant shutdowns during the Christmas and New Year’s holidays will reduce the need for packers to actively purchase supplies, he said.
Tuesday afternoon’s choice wholesale beef price dropped $2.64/cwt from Monday to $242.88. Select dropped 42 cents to $234.25, the U.S. Department of Agriculture said.
Live cattle futures losses mounted after nearby contracts fell beneath recent session lows, which triggered sell stops.
Hogs hit one-year low
CME lean hogs sank to their lowest point in a year, pressured by live cattle market selling and anxiety before next Tuesday’s USDA quarterly hog report, traders said.
The huge drop in wholesale pork prices, as processors discounted product to clear inventories over the year-end holidays, further pressured futures.
USDA data showed the afternoon’s wholesale pork price slumped $4.48/cwt from Monday, to $88.98. The decline was led by the $18.05 plunge in costs for picnic shoulder cuts and $10.09 cent drop in pork belly values.
Sharply lower wholesale pork prices should outweigh modest cash price gains, thereby shrinking pork packer margins, traders and analysts said.
Tuesday afternoon’s average price for hogs in the Iowa/Minnesota market was up 12 cents/cwt from Monday to $80.80, according to USDA.
February closed 1.6 cents/lb. to 81.675 cents, and earlier dropped to a Jan. 30 low. April ended 1.4 cents lower at 83.425, and at one point sank to its lowest point since Feb. 4.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.