Chicago Mercantile Exchange (CME) live cattle futures turned lower on Thursday pressured by fund liquidation, traders and analysts said.
Selling ahead of CME live cattle spot April options expiration on Friday exerted more futures pressure. Monday is the first notice day for deliveries against the April contract.
Spot April live cattle closed 0.725 cents per pound lower at 127.25 cents (all figures US$). It settled par with where the 10-day and 20-day moving averages converged.
Most-actively traded June ended 0.85 cent/lb. lower at 122.35 cents. The contract slipped beneath the 10-and-20-day moving average convergence support level of 122.56 cents, triggering fund selling.
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Futures receded despite fully steady cash cattle and wholesale beef prices.
“There is some talk that grilling demand may cause retail and wholesale beef buyers to step back into the market next week; at least that’s what the packer may be hoping for,” said Vetterkind Cattle Brokerage president Troy Vetterkind.
So far, cash cattle in the U.S. Plains traded at mostly $128 to $129 per hundredweight (cwt), which was fully steady with a week ago, said feedlot sources.
Thursday morning, the U.S. Department of Agriculture showed the average price for wholesale choice beef up 10 cents/cwt
to $191.58; select cuts gained four cents to $188.65.
Some investors reduced their deferred-month CME live cattle long positions in response to fallen Chicago Board of Trade corn futures.
Less expensive corn may cause cattle and hog producers to feed more animals, and to heavier weights, which could later pressure cash prices.
CME feeder extended losses for a third straight day while tracking the lower live cattle market.
April feeder cattle settled down 0.65 cent/lb. to 143.9 cents. May ended 0.625 cent lower, at 145.95 cents.
Mixed hogs on spreads
Hog futures settled mixed. Spot-April drew support from higher cash hog prices as packers pulled together supplies for the rest of this week’s slaughter, said analysts and traders.
On Thursday morning USDA quoted the average price for hogs at the eastern Midwest market at $76.09/cwt, up $1.06. Prices elsewhere in the Midwest region were unavailable.
While spot-April futures benefited from bullish spreads, the move pressured the June and July trading months, a trader said.
And futures’ premium to CME’s lean hog index at 76.99 cents stirred selling into rallies.
“Higher cash pushed the April contracts up a little, although at this level I’m cautious especially with spot-month expiration so close,” said independent hog futures trader James Burns.
Spot April hogs, which will expire on April 12, closed at 81.425 cents, up 0.1 cent. Most actively traded June was 0.45 cent lower at 92.025 cents.
— Theopolis Waters writes for Reuters from Chicago.
