U.S. livestock: Fund selloff undercuts CME live cattle

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Thursday slid after hitting contract highs in early trade, weighed by weaker wholesale beef prices and fund liquidation, traders said.

The morning’s wholesale beef price, or cutout, dropped for a second straight day, with choice down $1.10 per hundredweight (cwt) from Wednesday to $242.27. Select cuts fell 52 cents to $235.78, based on U.S. Department of Agriculture data.

Fund selling erupted after June futures fell below the 10-day moving average of 137.082 cents and triggered sell stops.

CME live cattle futures were further pressured by investors who adjusted positions before Friday’s USDA monthly Cattle on Feed report, traders and analysts said.

Analysts expect Friday’s data to show increased cattle placements last month as profitable margins allowed feedlots to bring in more calves for fattening.

The government will also publish the monthly cold storage report on Friday, which will include total beef and pork stocks in February.

Live cattle futures slumped despite stronger-than-expected cash prices pegged to profitable packer margins and fewer cattle for sale this week.

Cash cattle in Texas and Kansas moved at $150/cwt, up $2 from a week ago, feedlot sources said. No sales were reported in Nebraska where cash cattle last week fetched up to $152.

Beef packer margins for Thursday were estimated at a positive $24.15 per head, compared with a positive $31.75 on Wednesday and a negative $24.80 a week ago, as calculated by HedgersEdge.com.

April live cattle closed 1.7 cents per pound lower at 144.425 cents, after earlier spiking to a new contract high of 146.925 cents in electronic trading.

June ended at 136.2 cents, down 2.075 cents, after peaking at a fresh contract high of 138.775 cents.

Chart-related selling and live cattle market losses dragged some CME feeder cattle contracts from new highs.

March ended down 0.775 cent/lb. to 173.625 cents, after posting a new contract high of 175 cents. April closed two cents lower at 174.65 cents.

Hog futures mixed

CME hogs settled mixed, with April supported by higher cash hog prices while profit taking pressured June futures, traders said.

The government’s morning direct hog price data was not available. Hogs in the Midwest early on Thursday sold steady to $2/cwt higher, hog dealers said.

Packers Thursday morning hiked bids for cash hogs, whose numbers have declined as the deadly porcine epidemic diarrhea virus (PEDv) sweep through U.S. hog farms. The virus is expected to have a significant impact on hog production beginning later this spring through the rest of the year.

From Monday to Thursday, packers processed an estimated 1.633 million hogs, down 10,000 from last week and 75,000 fewer than a year earlier, according to USDA.

Traders sold June and July futures and at the same time bought April and deferred contracts, in a strategy known as spread trading. Those spreads lifted April and deep-deferred months to new contract highs.

April closed 0.65 cent/lb. higher at 124.8 cents, and hit a contract high of 126.4 cents. June finished 1.45 cents lower at 130.8 cents.

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

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