By Theopolis Waters
CHICAGO, June 20 (Reuters) – Chicago Mercantile Exchange live cattle futures closed lower on Thursday on selling fueled by the stock market’s sharp drop, which was caused by the U.S. Federal Reserve’s intention to curb its fiscal stimulus, analysts and traders said.
Funds and investors with assets in equities also took money out of a wide spectrum of commodity classes including gold, crude oil and CME live cattle, traders and analysts said.
“Agricultural futures were down hard early but closed well off lows,” said Hales Trading Co president David Hales. “However, if the money flow out of energy and metals becomes a rout, will the agricultural sector be immune?”
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June live cattle finished down 0.525 cent at 119.950 cents per lb and August dropped 0.400 cent to 120.000 cents. Firm wholesale beef prices helped lift futures from the session’s lows.
The drop in CME live cattle prompted expectations for lower cash cattle prices. Cash cattle bids in the Plains were at $117 per cwt versus asking prices of $120, said feedlot sources. Cash cattle last week moved at $120.
USDA on Thursday afternoon reported the wholesale price of choice beef, or cutout, up 32 cents from Wednesday at $199.30 per cwt. Select cuts rose $1.19 to $185.88.
Investors are awaiting Friday’s government monthly cattle-on-feed report. Analysts expect the report to show fewer cattle placed in feedlots in May due to higher feed costs and better grazing pastures.
USDA will simultaneously release its monthly cold storage report, which will show beef and pork inventories in May.
Lower live cattle futures pressured CME feeder cattle.
August feeders settled down 0.225 cent per lb at 144.425 cents and September was down 0.250 at 146.750 cents.
HOGS MIXED, DISCOUNT VS PROFIT TAKING
CME hogs closed mixed. The nearby July was lifted because of its discount to the exchange’s hog index, which was 103.87 cents per lb, traders and analysts said. July hogs settled up 0.275 cent per lb at 100.250 cents. August ended down 0.100 cent to 98.275 cents.
“We’ll continue to chase the index higher as long as cash prices hold up,” a trader said.
Government data showed the average hog price on Thursday afternoon in the closely-watched Iowa/Minnesota hog market at $100.78 per cwt, down 3 cents from Wednesday.
Tight seasonal hog supplies could force processors to keep cash bids steady. But, pork demand could suffer at current price levels.
Thursday afternoon’s mandatory wholesale pork price report, or cutout, calculated on a plant-delivered basis, was at $106.73 per cwt, down 25 cents from Wednesday, according to USDA.
