Chicago | Reuters — Chicago Mercantile Exchange cattle futures tumbled sharply for a second straight session on Monday on fund long liquidation, technical selling and concerns about slowing beef demand and rising supplies.
Actively traded February live cattle dropped to an eight-month low while several deferred-month contracts posted life-of-contract lows. January feeder cattle plunged more than three per cent to a 10-month low, while all other contracts posted life-of-contract lows.
“Funds have resumed their selling. They are liquidating heading into the end of the year,” said Mike Zuzolo, president of Global Commodity Analytics.
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“The trade got ahead of themselves, focusing on the supply side of the ledger. They needed to see continued strong demand to keep these kind of prices going,” he said.
Futures dropped despite their large discount to the cash market. Cash cattle prices were expected by some analysts to drop for a fourth consecutive week following the smallest Thanksgiving-week cattle slaughter in years.
February live cattle fell 2.15 cents to settle at 168.825 cents/lb. (all figures US$). January 2024 feeder cattle plunged 6.525 cents to end at 212.8 cents/lb.
Lean hog futures also dropped, mirroring steep declines in China, the world’s top pork consumer, where burdensome supplies and weak demand have weighed on values for months.
Financial pressure among large Chinese hog producers and worries about outbreaks of African swine fever among smaller producers has triggered a herd liquidation there, pushing more meat onto the market in the near term and limiting U.S. pork imports.
“China’s liquidating a portion of their herd. In the long run that means demand for the U.S. But in the short run it means no demand, at least from China,” said Ted Seifried, chief market strategist for Zaner Ag Hedge.
CME February hogs set a contract low of 66.825 cents/lb. and ended down 1.85 cents at 66.925 cents/lb.
— Reporting for Reuters by Karl Plume in Chicago.
