CHICAGO, Jan 8 (Reuters) – Chicago Mercantile Exchange live cattle contracts settled lower following Friday’s volatile session, stirred by funds that sold February and bought deferred contracts in accordance with the Standard & Poor’s Goldman Sachs Commodity Index (S&PGSCI), said traders.
Friday was the first of five days of the S&PGSCI “roll” process.
Simultaneously, some index funds bought CME livestock contracts as part of their annual rebalancing of commodity holdings.
February live cattle closed 0.650 cent per lb lower at 132.875 cents, and April ended down 0.475 cent to 133.825 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.
Expectations that upward-trending wholesale beef values might soon top out, and uncertainty regarding prices for unsold cash cattle, kept investors on the defensive.
So far, market-ready, or cash, cattle in Nebraska sold at $132 to $133 per cwt, down $1 to $3 from last week there, according to feedlot sources. They said Kansas and Texas cash 1bids stood at $133 against $138 to $140 asking prices.
Friday morning’s wholesale choice beef price was up 64 per cwt from Thursday to $231.23. Select cuts rose 70 cents to $224.59, based on U.S. Department of Agriculture data.
“I’m sitting on my hands after getting whipsawed by so many market issues, including the slowdown in China’s economy that’s still hanging over the stock market,” a trader said.
Fund liquidation, firm corn prices and weak live cattle future’s sank CME feeder cattle contracts. January closed 4.400 cents lower at 159.425 cents.
Most CME lean hog months ended moderately lower on Friday.
Traders sold deferred contracts and bought February with the view that wintry weather in parts of the Midwest might slow the movement of animals to market.
Spot February finished up 0.300 cent per lb to 59.850 cents, April ended 0.375 cent lower at 65.225 cents and May closed down 0.225 cent to 73.100.
Packers in Iowa/Minnesota on Friday morning paid $50.79 for hogs, down 50 cents from Thursday in light volume.
Meanwhile, wholesalers bought pork at $70.77, 99 cents higher than on Thursday, driven by increased costs for all categories, based on USDA data.
Compelled by their still highly profitable margins, packers may raise cash bids early next week especially if weather becomes an issue, a trader said.
He said supermarkets are eying cheaper pork as “wholesale beef prices itself out of the market.”
