U.S. live cattle fall on profit-taking, stock market

U.S. live cattle futures closed lower on Monday on profit taking ending six consecutive sessions of advances, said analysts and traders.

Some had expected the market to extend gains, but instead there was liquidation after the recent uptrend, said Citibank futures specialist Art Liming.

Stock market losses, prompted by domestic and global economic worries, further pressured Chicago Mercantile Exchange live cattle futures as slowing economies could hurt beef sales.

Live cattle December closed 0.55 cent lower at 128.4 cents. February closed down 0.325 cent at 132.4 cents (all figures US$).

Sellers outnumbered buyers on Monday after CME live cattle on Friday settled with a Relative Strength Index (RSI) of 71.50. A market with a RSI above 70 is considered overbought and subject to a downward correction.

Also, investors were in a selling mood as December filled a chart gap between Friday’s 128.55-cent low and last Wednesday’s 128.35-cent high.

Live cattle futures moved cautiously while waiting for feedlots to tally the number of cash cattle available for sale this week.

Cash cattle last week fetched $128 per hundredweight (cwt), up $2 to $3 from the prior week, driven by higher futures prices and much-improved wholesale beef values.

Packers also bought cattle for this week, the first full work week after the U.S. Thanksgiving holiday.

The wholesale price for choice beef Monday morning was $195.95/cwt, down 38 cents from Friday but $1.87 higher than a week earlier, according to the U.S. Department of Agriculture.

CME feeder cattle sagged on profit taking, live cattle market losses and chart-related selling.

January feeder cattle closed down 0.525 cent/lb. at 147.35 cents. March ended down 0.325 at 150.1 cents.

Hogs pare gains

Hog futures veered lower as profit taking erased initial gains. Early gains were on ideas packers may need hogs to fulfill this week’s slaughter schedule, said analysts and traders.

"With only USDA’s eastern corn belt hog price to go on, it made it tough to want to chase this thing (futures) any higher today," a trader said.

USDA Monday morning showed the average hog price in the eastern Midwest region at $73.55 per cwt, up 79 cents from Friday.

Not enough hogs were marketed in the Iowa/Minnesota and western direct hog growing regions Monday morning to establish prices for those areas, according to USDA.

Also, CME traders sold February and bought December and distant trading months, reversing bullish spreads that were prompted by the prospect of tighter hog numbers in the coming months.

December hogs settled unchanged at 82.475 cents/lb. after earlier peaking at a 7-1/2-month high of 83 cents.
February and April both closed down 0.4 cent at 86.975 and 91.5 cents, respectively.

– Theopolis Waters writes for Reuters from Chicago.