CHICAGO, Nov 14 (Reuters) – Chicago Mercantile Exchange lean hogs on Tuesday slid to their lowest level in a month after downward-trending cash prices triggered sell orders, traders said.
Fund selling developed after some contracts drifted below technical support areas.
December hogs ended 2.325 cents per pound lower at 59.975 cents, and below the 100-day moving average of 61.647 cents. February closed 2.800 cents lower at 67.500 cents, under the 40-day moving average of 67.990 cents.
Abundant supplies sank prices for slaughter-ready, or cash, hogs for a third straight session.
Some farmers moved pigs to packers after harvesting corn and soybeans, said analysts and traders. Others are sending hogs to market ahead of schedule to avoid lower prices before plants close over the Thanksgiving Day holiday, they said.
Meanwhile, nutrient-packed newly harvested corn and cool fall weather allow hogs to grow quicker, making them more available to packers while pumping more pork into the retail sector.
“I see this market moving higher, but you have to get through the holiday. These hogs are going to get bigger, not smaller,” said CHS Hedging analyst Steve Wagner.
Sell stops and initial cash price weakness pressed CME live cattle futures to a two-week low, said traders.
Some contracts slipped beneath technical support levels, which sparked fund sales.
December live cattle finished 1.075 cents per pound lower at 119.500 cents. February ended down 1.250 cents to 125.150 cents, and below the 40-day moving average of 126.456 cents.
On Tuesday a small number of cash cattle in Nebraska brought $119 per cwt, said feedlot sources. Cash prices in the U.S. Plains last week ranged from $122 to $125.
Investors look to Wednesday’s Fed Cattle Exchange sale of less than 1,000 animals as a barometer for remaining cash prices in the Plains later this week.
Fewer cattle are for sale this week, but that may not be enough to offset tepid wholesale beef demand and packer profits that are high but waning.
Processors will need fewer cattle while preparing to shut down plants during the upcoming holiday.
“Packers can sit back and grind the cash market down. He has no incentive to pay up for cattle,” said Wagner.
CME feeder cattle followed live cattle futures lower, with added pressure from deep cuts in cash feeder cattle prices due to increased supplies.
November feeder cattle closed 1.075 cents per pound lower at 157.625 cents.