By Theopolis Waters
CHICAGO, Oct 15 (Reuters) – Chicago Mercantile Exchange lean hogs on Wednesday closed down their three-cents per pound maximum daily price limit led by Wall Street’s more than two percent fall, traders and analysts said.
U.S. stocks dropped on Wednesday as economic data buttressed worries over the health of the world economy and signs emerged of slowing merger activity.
Funds that trade stock futures liquidated long positions across various commodities, including CME livestock markets.
“You have to watch the stock market because of panic there,” said Oak Investment Group president Joe Ocrant.
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Packers are coping with seasonally expanding supplies that depressed prices for slaughter-ready or cash hogs and pressured December hog futures.
Wednesday morning’s average hog price in Iowa-Minnesota was down $1.80 per hundredweight (cwt) from Tuesday at $103.37, according to the U.S. Department of Agriculture.
Futures losses mounted after December and February fell below their respective 40-day moving averages of 93.75 cents and 90.94 cents.
Speculators sold deferred hog contracts in anticipation of increased supplies during that period due to cheaper feed, traders said.
December and February closed at 91.925 cents and 89.200 cents per lb down 3.000 cents, respectively.
LIVE CATTLE FALL
CME live cattle futures slumped for a second straight session, pressured by the broader market retreat, traders said.
October closed 1.400 cents per lb. lower at 162.950 cents, and December down 1.450 cents to 162.475 cents.
Some live cattle market participants are looking at recent market losses as a buying opportunity but not as long as the stock market continues to struggle, said Ocrant.
Fund selling developed after December and February fell below their respective 20-day moving averages of 163.37 cents 163.53 cents.
Solid wholesale beef quotes and futures’ discounts to prices for this week’s market-ready, or cash, cattle cushioned nearby contracts’ fall.
On Wednesday, cash cattle in the U.S. Plains traded $163 to mostly $164 per cwt, steady to $1 lower than a week ago, feedlot sources said.
The morning’s choice wholesale beef price jumped $1.59 per cwt. from Tuesday to $251.00. Select gained 67 cents to $236.75, the USDA said.
There were less cattle for sale, and packers cut kills to recover lost margins and lift wholesale beef values, traders and analysts said.
Thinly traded deep-deferred CME live cattle contracts bore the brunt of the day’s fund-led selloff.
Except the October contract, CME feeder cattle finished down the three-cents per lb. price limit for a second day in a row due to live cattle market losses and fund liquidation.
October, which will expire on Oct. 30, closed 1.325 cents per lb lower at 237.400 cents. November and January ended at 234.150 and 228.125 cents, down 3.000 cents.
