By Theopolis Waters
CHICAGO, July 10 (Reuters) – Chicago Mercantile Exchange live cattle futures on Thursday fell for a fourth straight day, pressured by lower prices for cash cattle, traders said.
Cash cattle in the U.S. Plains sold at $155 to $156 per hundredweight (cwt), $2 to $3 lower than last week’s record highs, said feedlot sources.
Dwindling packer margins, more cattle available for sale and anticipation of a delayed seasonal bump in supplies dragged down cash prices.
Investors worried that wholesale beef prices might top out soon as temperatures rise in parts of the country, slowing down demand for heavier meals.
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U.S. livestock: CME cattle futures hit new contract highs as supplies tighten
Chicago Mercantile Exchange live and feeder cattle futures rallied to fresh contract highs on Wednesday, as tight supplies and strong cash market prices continued to send future contracts surging, market analysts said.
Traders are well aware of the overall tight cattle and hog supply situation, with the unknown being sustained meat demand, said independent livestock futures trader Dan Norcini.
Thursday morning’s wholesale price for choice beef marked a record high of $251.43 per cwt., surpassing Wednesday’s top. Select beef hit $242.96, eclipsing Wednesday’s record, according to U.S. Department of Agriculture data.
Fund liquidation and sell stops hastened futures’ losses.
Funds rolled out of August and into defered months.
Investors on Friday are expected to even up positions before the weekend, which could include short-covering, a trader said.
August live cattle finished 2.650 cents per pound lower at 148.150 cents, and October down 2.825 cents to 150.725 cents.
CME feeder cattle closed down the maximum 3-cent daily price limit on fund selling, live cattle futures losses and sell stop.
August and September closed 3.000 cents per lb. lower at 210.600 and 212.200 cents, respectively.
CASH, FUNDS UNDERCUT HOG FUTURES
CME hog futures finished lower after unprofitable margins caused packers to reduce bids for slaughter-ready animals, traders said.
USDA data showed the afternoon’s average hog price in the Iowa/Minnesota market fell $2.40 per cwt. from Wednesday to $129.85, USDA said.
Pork packer margins for Thursday were at negative $1.05 per head, compared with a negative 55 cents on Wednesday and a positive $1.50 a week ago, as calculated by industry analytics firm HedgersEdge.com.
Funds sold August and October futures after both contracts drifted below key moving average support levels.
Speculators liquidated deferred-month long positions as corn prices edged lower. Less expensive grain may encourage producers to feed hogs to heavier weights to help offset production losses caused by a virus that has killed millions of piglets.
July hogs, which will expire on July 15, closed 0.500 cent per lb. lower at 132.800. August ended down 1.650 cents to 127.950 cents, and below the 40-day moving average of 128.53 cents.
