U.S. livestock: Fund selloff extends CME live cattle losses

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Wednesday settled in bearish territory for a third consecutive session, hit by more fund liquidation after contracts drifted below technical support levels, traders said.

April live cattle ended 1.35 cents/lb. lower at 132.175 cents, and June closed 1.125 cents lower at 121.725 cents (all figures US$).

Both trading months finished below their respective 10-day moving average of 132.78 and 122.75 cents.

The spike in corn prices triggered selling in the feeder cattle market that contributed to live cattle futures losses, said Lane Broadbent, vice-president of KIS Futures.

CME live cattle contracts dropped despite upward-trending wholesale beef prices that may lend support to prices for market-ready, or cash, cattle by Friday.

On Wednesday, packers in Texas and Kansas bid $131-$132/cwt for cash cattle against asking prices of $136 to $138, said feedlot sources.

Last week, the bulk of cash cattle in the U.S. Plains moved at $132 to $136.

The morning’s wholesale choice beef price climbed $2.88/cwt from Tuesday, to $222.19. Select cuts surged $3.03, to 212.67, the U.S. Department of Agriculture said.

Still poor, but improved, packer margins and nearly 20,000 more head of cattle for sale than last week are cash price headwinds.

The average beef packer margin on Wednesday was estimated at a negative $24.25 per head, up from a negative $47.25 on Tuesday and a negative $37.80 a week ago, as calculated by HedgersEdge.com.

Technical selling and fallen live cattle futures pressured CME feeder cattle contracts. April closed down 0.475 cent/lb. to 154.8 cents.

Lower hog market settlement

Fund selling, and back-month CME lean hog futures’ premiums to the exchange’s hog index for April 11 at 66.64 cents, offset bullish market fundamentals, traders said.

April, which will expire on Thursday, closed down 0.075 cent/lb. to 66.525 cents.

May ended 0.925 cent/lb. lower at 74.175 cents and June finished 1.1 cents lower at 78.1. Both contracts closed beneath their respective 100-day moving average of 74.74 and 78.82 cents.

Government data on Wednesday showed the morning average cash hog price in Iowa/Minnesota up 27 cents/cwt from Tuesday to $62.92.

Wednesday morning’s wholesale pork price jumped $1.13/cwt from Tuesday to $78.13, the USDA said.

Some packers need hogs for the rest of this week, while better grilling weather stimulated retail meat buying, a trader said.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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