Chicago | Reuters — Chicago Mercantile Exchange live cattle on Thursday lost ground for a second day in a row, weighed down by lower cash prices and an increased supply outlook, traders said.
They said sell stops and fund liquidation contributed to market declines.
Some investors adjusted positions before the U.S. Department of Agriculture (USDA) monthly Cattle on Feed report on Friday.
February live cattle, which will expire on Feb. 28, closed 1.3 cents/lb. lower at 128.35 cents (all figures US$). April ended down 0.85 cent at 125.375 cents, and below the 10-day moving average of 125.65 cents.
Packers this week paid mostly $128/cwt for slaughter-ready, or cash, cattle in the U.S. Plains that a week earlier traded at $130.
The market has two conflicting issues; increased supplies ahead and improved wholesale beef buying interest than in recent weeks, said Allendale Inc. chief strategist Rich Nelson.
Wholesale beef prices rose four straight sessions after packers hiked beef costs to retailers to improve their margins, said analysts and traders, said analysts and traders.
Thursday’s U.S. government’s monthly cold storage report showed total January beef stocks at roughly 500 million lbs. versus average analysts’ estimate of 495.4 million.
Technical selling and lower live cattle futures sank CME feeder cattle. March feeders ended 0.65 cent/lb. lower at 146 cents.
Hogs up again
CME hog futures rose for a second straight day in anticipation of a cash price turnaround, partly supported by increased retail ham purchases as the Easter holiday approaches, said traders.
CME hogs also benefited from fund buying that kicked in after contracts broke through technical resistance levels.
Hog futures gained further after some investors reversed long CME live cattle short CME lean hog spreads that were implemented earlier this week.
USDA put January’s total pork inventory at about 568 million lbs. Analysts, on average, had projected 549.1 million lbs.
April hogs closed 1.375 cents/lb. higher at 71.275 cents, and above the 200-day moving average of 71.347 cents. May finished 1.275 cents higher at 77.425 cents, and above the 20-day moving average of 76.933 cents.
— Reporting for Reuters by Theopolis Waters in Chicago.