CHICAGO, May 26 (Reuters) – Chicago Mercantile Exchange live cattle futures on Friday finished sharply lower, hit by fund liquidation and the morning’s bearish U.S. Department of Agriculture Cattle-On-Feed report, said traders.
The report showed the number of cattle placed in feedlots in April hit a 14-year high for the month.
Traders said fund liquidation and diminished wholesale beef demand contributed to CME live cattle’s heavy losses.
CME’s livestock markets will be closed on Monday for the U.S. Memorial Day holiday.
June ended 1.225 cents per pound lower at 122.700 cents, and August 2.450 cents lower at 118.950 cents. Both contracts finished below their respective 10-day moving averages of 122.893 and 120.020 cents.
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As the harvest in southern Alberta presses on, a broker said that is one of the factors pulling feed prices lower in the region. Darcy Haley, vice-president of Ag Value Brokers in Lethbridge, added that lower cattle numbers in feedlots, plentiful amounts of grass for cattle to graze and a lacklustre export market also weighed on feed prices.
Futures tumbled after the cattle report’s bearish April placement result, said Oak Investment Group President Joe Ocrant. But some still may consider futures’ discount to cash prices a buying opportunity, he said.
Packers this week paid $132 to $133 per cwt for slaughter-ready, or cash, cattle that last week ago brought $133 to $134.
Processors purchased fewer cattle for next week with plants scheduled to shutdown on Monday’s holiday, the unofficial start of the summer grilling season.
Some processors avoided bidding up for supplies as National Beef Month in May winds down, allowing grocers to feature more pork and chicken.
Friday morning’s average wholesale beef price dropped 67 cents per cwt to $245.44 from Thursday. Select cuts fell 70 cents to $218.28, the USDA said.
CME feeder cattle tumbled almost 3 percent on profit-taking, technical selling and live cattle futures’ selloff.
August feeders ended 4.175 cents per pound lower, or down 2.6 percent, to 146.950 cents.
Investors sold CME live cattle and simultaneously bought the exchange’s hog futures, which helped drive them to fresh contract highs, said traders.
They said sentiment over tightening seasonal supplies and grocers featuring more pork in the weeks ahead generated additional futures buying.
June closed 0.875 cent per pound higher at 81.825 cents, and marked a new high of 81.875 cents. July finished 1.325 cents higher at 81.900 cents, and hit a fresh high of 82.025 cents.
Friday morning’s average cash hog price in Iowa/Minnesota was $71.67 per cwt in light volume, $1.78 lower than on Thursday, USDA said.
U.S. government data on Friday morning showed the average wholesale pork price was up 49 cents per cwt from Thursday to $90.79.
