Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures closed lower on Monday as funds rolled their positions by selling the October contract and buying deferred months, traders said.
Funds trading in CME’s live cattle and hog markets shifted October long positions further back in a procedure known as the “roll” by followers of the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).
Monday was the first of five days for the S+PGSCI roll process.
October live cattle ended at 158.525 cents per pound, 1.225 lower, and December down 0.075 cent at 160.85 cents (all figures US$).
Subsequent selling pared early-session advances led by futures’ discounts to last week’s higher-than-expected prices for market-ready or cash cattle.
Last week, cash cattle in the U.S. Plains traded at mostly $163 per hundredweight (cwt), up as much as $8 from the week before, feedlot sources said.
The recent upturn in wholesale beef values, though encouraging, was largely attributed to packers charging grocers more for product to offset high-priced cattle, they said.
Processors have to be concerned about moving beef with National Pork Month in October, said AgriVisor Services Inc. analyst Dale Durchholz.
Monday afternoon’s choice wholesale beef price jumped $2.72/cwt from Friday to $251.39. Select rose $1.59 to $237.84, the U.S. Department of Agriculture said.
Packers may curb slaughter rates to conserve margins and reduce spending for supplies this week, traders said.
CME feeder cattle notched a new high for a third straight day as corn prices edged lower.
September closed 1.425 cents/lb. higher at 227.15 cents, and October 1.55 cents higher at 225.925 cents.
Most hog futures end higher
CME live hogs settled mostly higher after funds rolled October positions into back months, which triggered more buying after those contracts broke through key moving average levels.
The roll by funds dropped October below the key 100-day moving average of 105.46 cents. It closed 2.55 cents/lb. lower at 103.075 cents.
December ended up 0.6 cent at 96.05 cents, and above the 100-day moving average of 95.01 cents. February closed 1.05 cents higher at 92.475 cents and topped the 40-day moving average of 91.41 cents.
October’s price premium to CME’s hog index at 95.8 cents discouraged buyers who worried that packers might soon slash prices for slaughter-ready hogs as their margins tighten, said traders.
The afternoon’s average hog price in Iowa/Minnesota was up $1.09/cwt from Friday to $99.79, said USDA.
Pork packer margins for Monday were a positive $2.20 per head, compared with a positive $6.65 on Friday, according to Colorado-based analytics firm Hedgersedge.com.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.