Chicago | Reuters – Chicago Mercantile Exchange live cattle on Thursday settled lower, pressured by profit-taking after futures posted new highs for the contract and reached their highest level in almost five months, said traders.
December futures led decliners after funds “rolled” that month and at the same time purchased deferred contracts ahead of similar moves next week.
Tuesday is the first of five days when funds in CME’s livestock markets that follow the Standard & Poor’s Goldman Sachs Commodity Index sell, or “roll,” December long positions mainly into February and April contracts.
December live cattle finished 2.275 cents per pound lower at 124.325 cents, and February ended 1.300 cents lower at 128.750 cents.
“The futures seem to be sensing that we have gone up too far too fast, thus getting ahead of the real, or cash, market,” said Oak Investment Group President Joe Ocrant.
On Thursday packers bid $120 per cwt for market-ready, or cash, cattle in the U.S. Plains against sellers asking $126. Last week, cash cattle in the Plains brought $116 to $119.
Market bulls cited impressive packer margins and improved wholesale beef demand after Pork Month ended in October as supportive cash price factors.
Bearish investors believe packers may resist paying more than they have to for supplies given more cattle for sale than last week and a significant number of readily available animals contracted against the futures market.
On Thursday, the U.S. Department of Agriculture’s export sales report for the week ended Oct. 26 showed U.S. beef exports at 16,600 tonnes, mostly to South Korea.
It was down 2 percent from the week before. Profit-taking and live cattle futures selloff undercut CME feeder cattle. November feeder cattle closed down 1.775 cents per pound at 157.925 cents.
Front-month hogs down
CME nearby lean hog contracts sagged, led by softer cash prices and rolling by funds into back months, said traders.
December hogs ended 0.800 cent per pound lower at 65.800 cents, and February closed down 0.100 cent at 72.050 cents.
Packers paid less for hogs while charging retailers more for pork to increase their margins, traders and analysts said.
Year-end holiday ham business and end-users putting pork bellies into storage to accommodate spring and summer bacon demand will influence wholesale pork values moving forward.
Thursday’s USDA export sales report put U.S. pork exports at 25,800 tonnes, mostly to Mexico, and up 42 percent from the prior week.