Chicago | Reuters — Chicago Mercantile Exchange live cattle on Monday lost ground for a second straight session, hit by technical selling and the “roll” by funds out of June into deferred contracts, traders said.
Funds in CME’s livestock markets that track the Standard + Poor’s Goldman Sachs Commodity Index sold, or rolled, June futures mainly into August on the first of five days for the process.
June live cattle closed down 0.875 cent/lb. at 105.175 cents, below the 10- and 40-day moving average convergence level of 105.749 (all figures US$). August ended 0.975 cent lower at 104.1 cents, below the 20-day moving average of 104.332.
Worries about increased supplies in the coming weeks kept prospective deferred-month futures buyers on the defensive. But declining cattle weights imply feedlots are rushing livestock to market — suggesting fewer animals later.
“Weights are coming down fast. Along with that, if I’ve got cattle due to go to market in May and they’re hedged in June, the basis, or spread between futures and cash prices, is a gift,” said Agrivisor Services analyst Dale Durchholz.
Rising beef packer profits and robust beef demand tempered nearby futures losses and could bode well for this week’s cash cattle prices.
Last week, packers paid $118-$128/cwt for slaughter-ready, or cash, cattle in the U.S. Plains that a week earlier brought $118-$126.50.
Market participants await the sale of 2,380 animals at Wednesday’s Fed Cattle Exchange. Livestock there last week on average fetched $122.50/cwt.
Technical selling, live cattle future’s selloff and steady to lower cash feeder steer prices pressured CME feeder cattle contracts.
May closed 2.775 cents/lb. lower at 137.625 cents.
Hogs end mostly higher
Fund rolling undercut the June CME hog contract while lifting back months, traders said.
Futures’ price premium to the exchange’s hog index for May 3 at 63.13 cents capped deferred-month market advances, they said.
May closed down one cent per pound at 66.075 cents. Most actively traded June ended up 0.65 cent at 74.175 cents, and July closed up 0.325 cent at 75.9 cents.
Retail spring grilling-related buying and preparation for the U.S. Memorial Day holiday cook outs supported wholesale pork prices, traders and analysts said.
Some packers will continue to bid up hogs for the rest of this week’s product, but one Midwest processor on Monday was idled by mechanical issues, a regional hog merchant said.
— Reporting for Reuters by Theopolis Waters in Chicago.