U.S. livestock: Live cattle retreat on technical selling, fund liquidation

CME April 2019 live cattle with Bollinger bands (20,2), a gauge of market volatility. (Barchart)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures fell for a third straight session on Tuesday on technical selling and fund long liquidation following the market’s recent climb to one-year highs, traders said.

Open interest in live cattle futures was expected to be lower for a second straight session after hitting an all-time record above 450,000 contracts on Friday.

“The funds have just piled into the long side recently because of the winter weather that seems to never end and now the flooding,” said Jeff French, analyst with Top Third Age Marketing.

“But seasonally, we are right in the time frame when cash prices and futures start to set some highs for the year and the weather starts getting nicer. The feed lots will dry up and the cattle will start to gain (weight) again,” he said.

CME April live cattle futures ended down 0.675 cent at 126.9 cents/lb. while the actively traded June contract fell 0.4 cent, to 120.725 cents (all figures US$).

April feeder cattle futures were up 0.025 cent at 146.225 cents/lb. while May feeders were down 0.9 cent at 149.8.

Lean hog futures ended mixed, with some contracts pressured by technical selling and profit-taking following the market’s recent surge.

Futures, however, remained well supported by strong export prospects as China, the world’s top pork consumer, is expected to boost purchases of the meat because its domestic hog herd has been decimated by African swine fever.

Chinese importers earlier this month booked their largest weekly U.S. pork purchases in nearly two years. More large deals are expected in the coming weeks and months so traders will be closely monitoring the U.S. Agriculture Department’s weekly releases of export sales data every Thursday morning.

CME April lean hogs ended up 1.075 cents at 79.725 cents/lb. while June hogs fell 0.225 cent to 95.325 cents.

— Karl Plume reports on agriculture and ag commodities for Reuters from Chicago.

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