Chicago | Reuters – Live cattle futures fell to a roughly 1-1/2-month low on Monday, sagging on worries of reduced demand for beef and cattle in cash markets, traders said.
Calendar spreading across Chicago Mercantile Exchange livestock futures also contributed to declines. Traders were exiting front-month positions and rolling into deferred months, resulting in bear-spreading in both cattle and hog futures.
Some traders expected wholesale beef prices, which have been rising, will soon turn lower as consumers turn to cheaper turkeys and hams ahead of the U.S. Thanksgiving Day holiday at the end of the month.
Beef packers, who have paid higher prices for cattle, may also slow their buying in anticipation of reduced demand.
Cash cattle over the weekend fetched mostly $115 to $116 per cwt in the U.S. Plains, steady to a few dollars higher than the previous week, according to U.S. Department of Agriculture data. Those prices were a discount to cattle futures, until Monday’s futures declines brought the cash and futures markets in line.
CME December live cattle fell 1.750 cents to 115.325 cents per pound. The contract earlier dropped to 114.350 cents, lowest since Sept. 13. February cattle eased 1.550 cents to 120.650.
“There was disappointment in the cash (cattle), the way futures acted,” said independent livestock futures trader Dan Norcini.
He added that some investment funds appeared to be liquidating long bets. “There’s just a lack of conviction.”
Regulatory data released on Friday by the U.S. Commodity Futures Trading Commision showed speculative investors were reducing their net long positions in live and feeder cattle, and adding to their long bets in lean hogs.
CME January feeder cattle futures fell 3.325 cents to 146.425 cents per pound, lowest since Sept. 4.
Feeder cattle prices also declined $1 to $3 per cwt at a closely watched cash auction in Oklahoma City, USDA said.
December lean hog futures declined 1.025 cents to 57.100 cents per pound.