Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Monday settled down by their three cents/lb. daily price limit, on sell stops and fund liquidation after some contracts fell beneath chart support levels, said traders.
October and December were down three cents/lb. at 98.875 and 100.05 cents, respectively (all figures US$). December futures ended below the 10-day moving average of 102.19 cents.
Live cattle’s trading limit will be expanded to 4.5 cents on Tuesday.
Some investors sold the October contract and simultaneously bought deferred months in anticipation of potential deliveries later on Monday.
Despite the morning’s firmer wholesale beef values, some worried that Hurricane Matthew may have harmed meat demand in the southeastern U.S., said Allendale Inc. chief strategist Rich Nelson.
Packers’ inability to consistently sell beef at higher prices, in the face of abundant supplies of pork and chicken, weighed on last week’s cash prices and threatens this week’s cash returns, a trader said.
A week ago, slaughter-ready, or cash, cattle in the U.S. Plains fetched $101 to $103/cwt, steady to $3 lower than the week before.
Monday morning’s choice beef price was up 46 cents/cwt from Friday at $183.53. Select cuts were 57 cents higher at $175.08, the U.S. Department of Agriculture said.
Sharply lower live cattle futures dragged down CME feeder cattle contracts. October feeder cattle closed down 2.975 cents/lb. at 124.65 cents.
Lean hogs closed mostly firm
CME October lean hogs, which will expire on Friday, benefited from its discount to the exchange’s hog index for Oct. 6 at 53.72 cents, said traders.
They said traders sold December futures and at the same time bought deferred contracts with the view that heavy supplies will continue to pressure cash prices.
CME October lean hogs closed unchanged at 50.675 cents per pound. Most actively traded December ended down 0.225 cent at 42.375 cents. February finished up 0.275 cent at 49.575 cents, and April rose 0.15 cent, to 57.025 cents.
Investors were concerned that possibly three plants were closed on Monday due to difficulty getting hogs and employees to those facilities as a result of Hurricane Matthew.
Smithfield Foods canceled last Saturday’s kill operations at its Tar Heel, N.C. hog plant as a precaution ahead of the storm.
On Monday, USDA estimated Monday’s slaughter at 385,000 head, 55,000 fewer than last week.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.