Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed sharply lower on Tuesday, racked by profit-taking and fund liquidation, traders said.
April closed 2.4 cents lower at 151.05 cents, and June down 2.125 cents, to 143.675 cents (all figures US$).
Funds sold after April and June drifted below their 40-day moving average of 152.73 cents and 145.53 cents.
April bore the brunt of the day’s selloff as funds sold or “rolled” some of their April long positions and simultaneously bought deferred contracts.
The trading strategy, known as the “roll,” was done ahead of similar moves later this week tied to the Standard + Poor’s Goldman Sachs Commodity Index (S+P GSCI).
Speculators periodically bought futures because of their discounts to last week’s market-ready (cash) prices and in anticipation of steady or possibly better cash values this week.
Fewer cattle for sale and profitable beef packer margins are supportive cash price factors, traders and analysts said.
Last week, the bulk of cash cattle in the U.S. Plains sold at $158 to $160 per hundredweight (cwt).
Traders await clear beef demand signals as seasonally tight supplies slow the flow of product to grocers who are eying cheaper pork.
Tuesday morning’s choice wholesale beef price climbed $1.03/cwt from Monday to $249.70. Select cuts slipped 47 cents, to $244.98, the U.S. Department of Agriculture said.
Profit-taking, live cattle market losses and firm corn prices weighed on CME feeder cattle contracts.
March closed 1.375 cents/lb. lower at 202.725 cents.
Lean hogs tumble
CME lean hogs slumped more than three per cent, led by profit-taking along with lower cash and wholesale pork prices, traders said.
April hog futures closed down 2.075 cents/lb. to 65.6 cents, and May 2.775 cents lower at 77.525 cents.
Tuesday morning’s average cash hog price in Iowa/Minnesota shed 79 cents/cwt from Monday to $65.42, the USDA said.
Separate government data showed the morning’s wholesale pork price had fallen 77 cents/cwt from Monday, to $68.90.
Packers sliced cash hog bids to stabilize their shaky margins while waiting for U.S. West Coast shippers to clear pork that stacked up on docks.
And meat sales in the U.S. northeast eased as residents brave another winter storm.
“You have a whole lot of people who live up there, so that has not been a good situation for demand,” said Paragon Economics president Steve Meyer.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.