U.S. livestock: Fund liquidation sinks CME live cattle

Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures on Wednesday closed lower, pressured by fund liquidation that erased short-covering advances early in the session, traders said.

More selling developed after the August and October contracts slipped below their respective 10-day moving averages of 152.31 and 155.03 cents, which triggered sell stops.

August live cattle finished 2.725 cents per pound lower at 150.8 cents, and October down 2.425 cents to 153.55 cents (all figures US$).

August led declines after funds rolled their positions by selling the August contract and buying deferred months.

Funds trading in CME’s live cattle and hog markets shifted August long positions further back in a procedure known as the “roll” by followers of the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).

Wednesday was the second of five days for the S+PGSCI roll process.

Market losses and thinner margins stirred talk of steady to lower prices for market-ready, or cash, cattle despite steadily rising wholesale beef values.

“We do have some bearish issues, which are valid. However, the trade is still not convinced that the bull market is done,” said Rich Nelson, chief strategist at Allendale Inc.

On Wednesday, a light number of cattle in Nebraska moved at $157 to $158 per hundredweight (cwt), steady to $1/cwt lower than a week ago, a feedlot source said. Cattle elsewhere in the state and the Plains were priced at $160, he added.

Last week, cash cattle in the U.S. Plains sold at an all-time high of $158/cwt.

Wednesday afternoon’s wholesale price for choice beef reached a record high of $250.57/cwt, surpassing Tuesday’s top. Select slipped 36 cents to $242.26, based on U.S. Department of Agriculture data.

CME feeder cattle closed down sharply, pressured by the live cattle market’s retreat, sell stops and technical selling.

August closed down 2.3 cents/lb. at 213.6, and September 2.275 cents lower at 215.2 cents.

Hog futures finish mixed

CME July hog futures, which will expire on July 15, drew support from higher cash prices as the porcine epidemic diarrhea virus (PEDv) tightens near-term supplies, traders said.

“There has been some concern about cash hog prices,” said Nelson. “But as a whole, we continue to hear reports of packers scrambling to find numbers.”

USDA data showed the afternoon’s average hog price in the Iowa/Minnesota market up $2.03/cwt from Tuesday to $132.41, USDA said.

Fund rolling pressured August futures, but pushed up deep-deferred trading months.

July hogs closed 1.1 cents/lb. higher at 133.3. August ended down 0.25 cent at 129.6 cents.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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