Chicago | Reuters — Chicago Mercantile Exchange live cattle futures fell hard on Friday, with the April contract down by its three-cent-per-pound price limit, on fund selling and anticipation of further weakness in cash values, traders said.
April ended three cents/lb. lower at 158.8 cents/lb., and June was down 2.775 cents to 148.8 cents (all figures US$).
The CME live cattle trading limit will be expanded to 4.5 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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Market-ready (cash) cattle in the U.S. Plains moved at $163-$165.50 per hundredweight, down from $167-$169 a week ago, feedlot sources said.
The afternoon’s choice wholesale beef price fell $1.88/cwt from Thursday, to $256.51. Select cuts slumped $2.54, to $249.91, the U.S. Department of Agriculture said.
Packers are on pace to process 502,000 head of cattle, down 23,000 from last week, based on government 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 per cent on technical selling, sell stops and live cattle futures losses.
April closed 4.025 cents/lb. lower at 212.45 cents.
Hogs rally with cash prices
CME lean hogs closed higher, fueled by recently upward trending cash prices, traders said.
April closed up 0.45 cent/lb. at 62.55 cents, and May ended up 1.275 cents at 71.775 cents.
Government data showed the afternoon’s average cash hog price in Iowa/Minnesota was $61.03/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 coming Wednesday.
The spreads pushed June futures above the 40-day moving average, which stirred fund buying.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.
