U.S. livestock: CME live cattle stumble on profit-taking

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle turned lower on Friday after profit-taking and fund liquidation gave back some of the market’s gains over the past two days, said traders.

U.S. stocks’ plunge over trade war fears unnerved CME livestock investors still digesting Monday’s Chinese tariff hike on U.S. pork, with similar plans for beef.

China’s beef tariff threat had a minimal fundamental impact on cattle futures because it mainly involves byproducts, but psychologically it is another factor affecting an already bearish market, said KIS Futures president Lane Broadbent.

Through the first two months of 2018, U.S. beef exports to China, which resumed in June 2017, totaled 1,187 tonnes valued at $11.1 million, according to the latest U.S. Meat Export Federation (USMEF) data (all figures US$).

This week packers paid $116-$118/cwt for market-ready, or cash, cattle that a week ago fetched $120-$121 in the midst of ample seasonal supplies and soft wholesale beef demand.

Investors will closely track next week’s cash cattle and beef prices for signs of a recovery as grocers feature meat for grilling while more parts of the country enjoy spring rather than winter-like weather.

April live cattle closed down 2.075 cents/lb. at 112.225 cents. June ended 2.725 cents lower at 102.325, and below the 10-day moving average of 103.49 cents.

Technical selling, profit-taking and lower live cattle futures sank CME feeder cattle contracts.

April closed 2.15 cents/lb. lower at 135.325 cents.

Hogs close lower

CME hogs fell on lower wholesale pork prices and pressure from the exchange’s live cattle market selloff, said traders.

They said worries about higher Chinese tariffs on U.S. pork discouraged futures buyers.

From January to February U.S. pork export volume to Hong Kong/China dropped 14 per cent year-over-year to 69,515 tonnes worth $164 million, the USMEF said.

The group attributed the decline to increased Chinese supplies.

Some U.S. farmers may be sending hogs to market earlier than planned as almost $4 per bushel corn erodes their profits, a trader said.

Sharply lower wholesale pork belly prices suggest that end-users are relying on fresh rather than frozen product, he said.

April hogs closed down 0.325 cent/lb. at 52.125 cents. May ended 1.375 cents lower at 64.475 cents, and below the 10-day moving average of 65.043. Most actively-traded June finished 0.55 cent lower at 73.275 cents.

— Reporting for Reuters by Theopolis Waters in Chicago.

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