U.S. livestock: CME feeder cattle fall on corn rally

CME lean hogs end lower

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

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed lower Wednesday, led by weakness in feeder cattle futures and profit-taking after a near two-week high, traders said.

CME feeder futures set the tone, falling one per cent as corn futures jumped on worries about dry U.S. weather, a move that signaled higher costs for grain and tighter feeding margins.

CME August feeder cattle finished down 1.875 cents at 156.95 cents/lb. (all figures US$).

August live cattle futures ended down 0.5 cent at 121.25 cents/lb., turning lower after rising to 122.6 cents, the contract’s highest since July 2.

Cash trade was slow after market-ready cattle traded in the southern Plains on Tuesday at around $120 per hundredweight (cwt).

Beef prices declined, with choice cuts down 46 cents at $272.88/cwt on Wednesday afternoon, according to USDA. Select cuts fell by $2.99, to $253.75/cwt.

Lean hog futures closed mostly lower in technical trade, with the August contract losing ground to the October on spreads. Wednesday was the last day of the periodic “Goldman roll,” when some commodity index funds roll long positions forward.

CME August lean hog futures settled down 0.825 cent at 105.100 cents/lb., while October ended down 0.15 cent at 89.225 cents. Both contracts fell to the day’s lows in the final few minutes of trade.

“The Goldman roll is causing convulsions, as it always does. The August (contract) is discounted to the (CME’s lean hog) index, so the board is acting like it expects cash hog prices to break,” said Dan Norcini, an independent livestock trader.

Brokers await Thursday’s weekly USDA export sales report, which will detail sales of U.S. pork and beef in the week ended July 8.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago.

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