Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed sharply lower on Monday, with nearby contracts down by their three-cent-pr-pound daily price limit, shaken by sell stops and fund liquidation, traders said.
April and June live cattle ended down by the three-cent limit at 128.475 and 119.175 cents/lb., respectively (all figures US$). Live cattle’s trading limit will be expanded to 4.5 cents on Tuesday.
Funds that were heavily long in the market reduced those positions last week and again on Monday, said U.S. Commodities analyst Don Roose.
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The prospect that cash prices might weaken as more cattle come to market, as well as the possibility that wholesale beef prices are about to peak soon, contributed to Monday’s deep losses, said traders and analysts.
The morning’s wholesale choice beef price was at $225/cwt, down 13 cents from Friday. Select cuts were up 18 cents to $215.91, the U.S. Department of Agriculture said.
Still, market bulls contend that the day’s selloff was overdone based on much-improved packer margins and futures’ discounts to last week’s cash prices.
Packers last week paid $133-$136/cwt for market-ready, or cash, cattle in the U.S. Plains, steady to up $1 from the week before.
The average beef packer margin on Monday was estimated at positive $32.95 per head, up from a positive $21.35 on Friday and a negative $62.35 a week earlier, as calculated by HedgersEdge.com.
Weaker cash feeder cattle prices and heavy live cattle futures losses dropped CME feeder cattle by their 4.5-cent/lb. limit. April closed at 150.575 cents. The limit will be expanded to 6.75 cents on Tuesday.
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Cash and wholesale pork price gains supported CME lean hog futures, a trader said.
Thinly-traded May ended 0.45 cent/lb. higher at 74.85 cents. Most-active June finished up 0.2 cent, to 77.825.
Government data on Monday showed the morning average cash hog price in Iowa/Minnesota up nine cents/cwt from Friday in light volume to $63.37.
Monday morning’s wholesale pork price rose 77 cents/cwt from Friday, to $80.03, USDA said.
“Pork exports are continuing to be fairly decent. And cash may take on a more seasonal rally moving forward into the summer,” said Roose.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.
