Chicago | Reuters — Chicago Mercantile Exchange live cattle futures posted steep losses for a second straight session on Monday, partly due to fund liquidation after contracts fell through key technical support levels, traders said.
April closed 2.45 cents per pound lower at 155.35 cents (all figures US$). It dropped below the 100-day and 40-day moving averages of 157.48 cents and 157.4 cents.
June ended at 145.875 cents/lb., 3.125 cents lower and beneath the 40-day moving average of 148.67 cents.
The recent selloff in cattle futures expanded their bullish discounts to last week’s cash cattle prices that weakened after packers cut kills to improve margins and boost wholesale beef values.
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“This futures market distorts the fundamentals in a big way, mostly because of fund activity,” said John Nalivka, president of Sterling Marketing Inc.
Last week, market-ready (cash) cattle in the U.S. Plains traded at $160-$163 per hundredweight (cwt), compared with $163-$165.50/cwt the week before.
Monday morning’s choice wholesale beef price was up to $258.71/cwt, up 92 cents from Friday. Select cuts were $1.59 higher at $252.56, the U.S. Department of Agriculture (USDA) said.
The day’s beef packer margins were a negative $2.80 per head, compared with a positive $10.55 on Thursday and a negative $55.10 last week, according to HedgersEdge.com.
Technical selling, steady-to-weak cash feeder cattle prices and slumping live cattle futures pulled down CME feeder cattle contracts.
April closed 1.175 cents/lb. lower at 211.825 cents, and May 3.375 cents lower at 205.15 cents.
Weaker hogs contracts
CME lean hogs finished lower, largely on spillover live cattle market pressure and futures’ premiums to the exchange’s hog index for April 16 at 63.73 cents, traders said.
May closed down 0.25 cent/lb. to 70.275 cents, and June 0.75 cent lower at 75.525 cents.
May and June slipped beneath their respective 10-day and 20-day moving averages of 70.68 cents and 76.21 cents, which touched off fund selling and sell stops.
Uncertainty about near-term fundamental direction sidelined potential futures buyers.
Cash hogs in the U.S. Midwest on Monday morning held steady with Friday’s prices, according to region hog dealers.
The morning’s wholesale pork price gained 10 cents/cwt from Friday to $68.09, USDA said.
Some packers need hogs through the middle of the week, and grocers bought pork for grilling demand and Mother’s Day features, traders said.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.
