U.S. livestock: Profit-taking undercuts CME live cattle

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed lower on Monday, pressured by fund selling and profit-taking after last week’s market rally, traders said.

August live cattle ended 0.75 cent/lb. lower at 116.925 cents (all figures US$). October closed 0.875 cent lower at 114.65 cents and below the 100-day moving average of 115.16 cents.

“I don’t see anything about this action today that’s not consistent with a market that’s just seeing itself pull back from a big up. I think we’re going higher,” said West Oak Commodities analyst Tom Tippens.

Investors expected packers to pay more for supplies than last week as grocers look to satisfy meat demand for the Sept. 5 Labour Day holiday, the last grilling holiday of the summer.

Last week, market-ready, or cash, cattle brought $117-$120/cwt, up from $116-$117 the week before.

The morning’s choice beef price declined 27 cents/cwt from Friday to $198.73. Select cuts jumped $1.25, to $191.45, the U.S. Department of Agriculture said.

Monday is the first notice day for live cattle deliveries against the August contract that will expire on Aug. 31.

Some market participants periodically sold August futures and bought deferred contracts to avoid taking potential delivery of cattle, traders and analysts said.

CME feeder cattle was pressured by profit-taking but supported by steady-to-higher cash feeder cattle prices.

August feeders closed down 0.525 cent/lb. to 149.125 cents, September ended unchanged at 147.2 cents and October finished 0.425 cent/lb. higher at 144.3 cents.

Mostly higher hog close

Speculative buying and buy stops lifted most CME lean hog contracts, traders said.

They said August futures, which will expire on Friday, lagged after investors sold that contract and simultaneously bought deferred months.

August hogs finished down 0.35 cent/lb., to 67.1 cents, after earlier posting a new contract low of 66.95 cents. October ended 0.55 cent/lb. higher at 58.85 cents and December up 0.65 cent to 54.725.

Lower-trending cash prices made some market bulls nervous about buying the October contract despite its sizeable discount to CME’s hog index for August 4 at 70.48 cents.

“There are a ton of hogs around right now and it’s hard to say how much of that is already baked into the market. So I’m waiting to see what happens after August goes off the board on Friday,” a trader said.

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

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