CME live cattle fall sharply with cash prices; hogs lower on cash market

By Theopolis Waters
CHICAGO, Aug 12 (Reuters) – Chicago Mercantile Exchange live cattle futures finished down sharply on Tuesday, pressured by preliminary sales of slaughter-ready or cash cattle at lower prices, traders said.
August ended down the 3.000-cents per pound daily price limit at 149.625 cents. October finished 2.775 cents lower at 147.675 cents.
On Tuesday morning, a small number of cash cattle in Nebraska sold at $155 per hundredweight (cwt), $5 lower than a week ago, feedlot sources said.
Returns for unsold cattle may also suffer the same fate given a looming seasonal supply increase and waning beef demand heading into the fall.

Tuesday afternoon’s choice wholesale beef price dropped $1.29 per cwt from Monday to $258.15. Select beef rose $1.51 to $253.13, the U.S. Department of Agriculture said.
“Traders are thinking that as far and as fast as the cattle market surged in June and July, it is vulnerable to a pretty substantial drop from this point,” said Doane Advisory Services economist Dan Vaught.
However, much of the bearishness may have already been factored in to the market given the August contract’s sizable discount to recent cash prices, he said.
Market participants sold August futures, which will expire on Aug. 29, and simultaneously bought back months in a trading strategy known as bear spreading.
Fund liquidation and sell-stops hastened October futures losses.
CME feeder cattle nearby contracts ended down the 3.000-cents per lb daily price limit following the live cattle market’s steep drop and lower prices for feeder cattle in local markets.
August closed 2.925 cents per lb lower at 214.550 cents, and September at 214.650, down 2.775 cents.
CME hogs finished lower in response to deep cuts in cash and wholesale pork values, traders said.
August, which will expire on Aug. 14, closed down 0.475 cent per lb at 114.075 cents.
October ended down the maximum 3.000 cents per lb daily price limit at 97.175, and December 2.250 lower at 87.300 cents.
The afternoon’s average price of hogs in Iowa/Minnesota slumped $3.30 per cwt from Monday, to $110.46, the USDA said.
Government data showed Tuesday afternoon’s wholesale pork price at $117.02 per cwt, $3.50 lower than Monday.
The seasonal buildup of hogs at heavy weights compared with last year pressured prices for market-hogs and pumped more pork into the retail pipeline, a trader said.
Speculators sold deferred months with the view that cheaper feed might cause hog farmers to expand their herds, he said.
China has barred pork imports from six U.S processing plants effective on Wednesday over the use of a feed additive that promotes lean muscle growth, according to the USDA.

About the author



Stories from our other publications