U.S. livestock: Cattle, hog futures sag on technical selling

Wholesale beef prices supportive

CME June 2021 live cattle (candlesticks) with 20-, 50- and 100-day moving averages (pink, brown, red lines) and August 2021 feeder cattle (black line). (Barchart)

Chicago | Reuters — U.S. cattle futures closed lower on Wednesday on lacklustre cash markets, soaring feed costs and technical selling, traders said.

Chicago Mercantile Exchange June live cattle futures settled down 1.95 cents at 117.25 cents/lb., with chart-based selling accelerating as the contract fell below its 100-day moving average near 117.65 cents (all figures US$).

CME August feeder cattle futures ended down 2.6 cents at 151.925 cents/lb., pressured as Chicago Board of Trade corn futures neared an eight-year high above $6 a bushel, signaling higher cattle feed costs.

In the cash market, cattle traded in Texas and Kansas at $119-$120/cwt, steady to $1 lower than last week, the U.S. Department of Agriculture said.

“The market is waiting for any sort of positive news on the cash side, and so far there has not been much,” said Altin Kalo, economist at Steiner Consulting Group.

He noted that commodity funds hold net long positions in CME live cattle and lean hog futures, leaving both markets vulnerable to bouts of long liquidation.

Traders shrugged off support from robust wholesale beef prices. Choice cuts of boxed beef rose $2.20 at $280.46/cwt on Wednesday, a 10-month high. Select cuts were up $1.41 at $271.88/cwt, according to USDA data.

Hog futures fell on technical selling and long liquidation, despite firm cash hog prices. CME June lean hog futures settled down 1.825 cents at 104.525 cents/lb.

Worries about summertime demand for pork products hung over the market, Kalo said.

“The pork market overall has been driven by processing items; bellies and hams have been the big drivers. And there is a lot of uncertainty there. If (prices for) those items start to give, then that might present some risk for the summer,” Kalo said.

The U.S. pork cutout, an indication of wholesale pork prices, fell $1.39 at $113.64/cwt on Wednesday afternoon, with pork belly prices down nearly $4.

Traders await USDA’s weekly export sales report on Thursday and its monthly Cattle on Feed report on Friday. Analysts surveyed by Reuters on average expect USDA to show a 33.7 per cent increase in the number of cattle placed in U.S. feedlots in March compared with the previous year.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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