CHICAGO, April 10 (Reuters) – Chicago Mercantile Exchange live cattle futures fell hard on Friday, with the April contract down by its 3-cents per pound limit, on fund selling and anticipation of further weakness in cash values, traders said.
April ended at 158.800 cents per lb., and June was down 2.775 cents at 148.800 cents.
The CME live cattle trading limit will be expanded to 4.500 cents on Monday following April’s limit-down settlement.
Investors expect packers to spend less for unsold cattle given reduced slaughters, lower wholesale beef values and weaker preliminary cash prices.
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Cash cattle in the U.S. Plains moved at $163 to $165.50 per hundredweight, down from $167 to $169 a week ago, feedlot sources said.
The afternoon’s Choice wholesale beef price fell $1.88 per cwt. from Thursday to $256.51. Select cuts slumped $2.54 to $249.91, the USDA said.
Packers are on pace to process 502,000 head of cattle, down 23,000 from last week, based on USDA estimates.
Investors who for months bought CME live cattle and sold hog futures, unwound or lifted those spreads on Friday, said CHS Hedging analyst Steve Wagner.
“The cattle side of that hedge is far more dangerous than the short hog side,” he said.
Market losses mounted after April futures drifted below the 20-day moving average of 160.41 cents, which triggered fund selling.
Fund liquidation erupted in the June contract after it dropped beneath the 20-day and 100-day moving averages of 151.15 cents and 150.37 cents, respectively.
CME feeder cattle lost nearly two percent on technical selling, sell stops and live cattle futures losses.
April closed 4.025 cents per lb. lower at 212.450 cents.
HOGS RALLY WITH CASH PRICES
CME lean hogs closed higher, fueled by recently cash price increases, traders said.
April closed up 0.450 cent per lb. at 62.550 cents, and May ended up 1.275 cents at 71.775 cents.
USDA data showed the afternoon’s average cash hog price in Iowa-Minnesota was $61.03 per cwt., up $1.82 from Thursday.
Packers hiked cash bids while buying for Saturday’s estimated 208,000-head kill and for early next week, traders and analysts said.
In a trading strategy known as bear spreading, investors bought deferred months and sold April ahead of expiration on April 15.
The spreads pushed June futures above the 40-day moving average, which stirred fund buying.
