Chicago | Reuters — Chicago Mercantile Exchange livestock futures were lower on Thursday, with live cattle prices easing from recent contract highs on technical selling ahead of a major winter storm forecast to hit U.S. cattle country, traders said.
Feeder cattle futures fell to a roughly 1-1/2 week low, pressured in part by rising corn prices that boosted costs for fattening cattle. Worries of reduced demand for cattle from feedlots also weighed ahead of the second big winter storm to hit the region in as many weeks.
Lean hogs extended recent declines on abundant U.S. supplies and a lack of supportive information that could stem losses.
CME February live cattle finished 0.725 cents lower at 127.1 cents/lb. and most-active April cattle was down 0.825 cent, to 126.9 cents (all figures US$). Both contracts had jumped to life-of-contract highs on Wednesday.
“Live cattle futures, especially nearby February futures, were technically overbought going into today’s session and ripe for at least a short-term downward correction,” advisory Brock and Associates said in a note.
The cattle market had run up on worries that heavy snows and plunging temperatures could impact shipments of cattle to slaughterhouses and slow weight gains in cattle. In bitter-cold temperatures, cattle devote more energy to keeping warm than gaining weight, reducing feed efficiency and potentially reducing overall supplies.
The storm was expected to hit the Plains and Midwest regions by this weekend, following a storm late last week, according to meteorologists.
“We’re looking at not only next couple weeks — probably through the middle of February. That’s what gets hard for livestock; it’s sort of a cumulative effect,” said David Streit, agriculture meteorologist with the Commodity Weather Group.
“You cut back on any weight gains during that time period, and you’ll have some outright losses, I would guess, in some of the more significant cold air outbreaks,” he said.
CME March feeder cattle fell to the lowest since Jan. 7, settling 1.775 cents lower at 142.925 cents/lb.
CME February lean hogs were up 0.8 cent, to 60.85 cents/lb., while more-active April hog futures declined 0.45 cent to 64.625 cents.
— Michael Hirtzer reports on commodity markets for Reuters from Chicago.