Chicago | Reuters — Chicago Mercantile Exchange live cattle nearby trading months closed down their three-cents-per-pound price limit on Friday, pressured by persistent fund liquidation as part of their yearly rebalancing of commodity allocations.
Live cattle February and April closed at 160.6 cents and 159.425 cents, respectively (all figures US$).
CME live cattle trading limits will be expanded to 4.5 cents on Monday due to Friday’s limit-down settlement.
Funds involved in CME’s livestock markets that track the Standard + Poor’s Goldman Sachs Commodity Index (S+P GSCI) sold, or “rolled,” their February long positions in back months in a process known as the S+P GSCI roll.
Friday was the second of five days for the S+P GSCI roll procedure.
February and April contracts fell below their respective 20-day moving of 162.27 cents and 161.43 cents, which furthered fund selling.
Meanwhile, bulls waited to buy futures based on this week’s cash and wholesale beef price strength.
Slaughter or cash cattle in the U.S. Plains sold $168 to $172 per hundredweight (cwt), up from $166 to $169 a week ago, feedlot sources said.
Friday morning’s choice wholesale beef rose $1.82/cwt from Thursday to $256.39. Select cuts rose $2.24, to $247.58, the U.S. Department of Agriculture said.
Packers were short bought on supplies after the New Year’s holiday, but passed on their cattle costs to retailers, a feedlot source said.
CME feeder cattle closed sharply lower, with some contracts down the 4.5 cents daily limit, on live cattle losses, firm corn prices and technical selling.
January closed down 3.2 cents/lb. lower, to 222.425 cents. March finished limit down at 212.55 cents.
Monday’s trading limit will be expanded to 6.750 cents after some contracts closed limit-down on Friday.
Firmer hogs settlement
CME lean hogs closed higher on short-covering and bargain hunting, traders said.
Cash price uncertainty, and the morning’s wholesale pork price slump, limited futures’ advances.
On Friday morning, cash hogs in the Midwest traded steady with Thursday’s prices, according to regional dealers.
USDA data showed the morning’s wholesale pork price had dropped 68 cents/cwt from Thursday to 83.23.
Market bulls are betting on a seasonal turnaround in cash prices when packers clean up the glut of supplies after farmers confined animals in swine buildings longer to keep in heat.
Wholesale pork prices are pressured by ample numbers of heavyweight hogs that increased the flow of product to retailers.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.