Chicago | Reuters – Chicago Mercantile Exchange live cattle on Tuesday settled lower, pressured by sell stops and caution in advance of cash prices later this week, traders said.
Funds involved in CME livestock futures that track the Standard & Poor’s Goldman Sachs Commodity Index sold, or “rolled,” December long positions mainly into February and April contracts.
Tuesday was the first of five days for the roll process. December live cattle finished 0.700 cent per pound lower at 124.625 cents, and February ended down 0.275 cent to 130.375 cents.
Schwieterman Inc. broker Domenic Varricchio listed several potential headwinds for slaughter-ready, or cash, cattle prices including the recent run up in gasoline prices.
“Crude oil going up like it has, you have to watch gasoline if it starts coming up because maybe it begins eating into the beef budget a little bit,” said Varricchio.
Packers may also think twice about paying more for supplies after sharply higher cash in recent weeks shaved their margins. And turkey and ham, rather than beef, will grace most grocery store advertisements heading into the Thanksgiving holiday.
Still, market bulls believe this week’s cash prices will draw support from spotty supply shortages and recently improved beef demand following National Pork Month in October.
Investors will look to Wednesday’s Fed Cattle Exchange (FCE) of almost 1,200 animals as a barometer for subsequent cash prices elsewhere in U.S. Plains.
One pen of cattle there a week ago brought $120 per cwt. Last week the bulk of cash cattle in the Plains moved from $122 to $126 per cwt.
Softer nearby live cattle futures weighed on CME feeder cattle. November feeder cattle closed down 0.275 cent per pound at 159.875 cents.
Lower hog futures at close
Sell stops, downward-trending cash prices and fund liquidation dragged CME lean hogs lower, said traders.
December hogs ended 0.700 cent per pound lower at 63.925 cents, and below the 20-day moving average of 64.290 cents. February closed 1.350 cents lower at 70.875 cents, and below the 10-day moving average of 71.370 cents.
Fallen cash prices suggest packers are nearly full inventory-wise as a few farmers send hogs to market after wrapping up harvest activities in the Midwest, a trader said.
He added that some producers might be moving hogs to market ahead of schedule to avoid lower prices that typically occurs before plants close during the Thanksgiving holiday.