Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Friday fell more than two per cent, their steepest daily decline in 1-1/2 months, pressured by sell stops and fund liquidation, said traders.
December live cattle closed down 2.35 cents/lb. to 108.225 cents, and February 2.5 cents lower at 108.875 cents (all figures US$).
Both contracts settled well below their respective 10-day moving average of 109.49 and 110.51 cents.
“The focus has already shifted to what kind of recovery both the fed cattle prices and cutout values will have in January,” said Cassandra Fish, author of industry blog The Beef.
Futures retreated after peaking at a three-month high on Thursday in response to the bulk of slaughter-ready, or fed, cattle that sold at $114 to $115/cwt — up as much as $5 from last week.
Packers competed for supplies led by much-improved wholesale beef demand.
Friday morning’s choice wholesale beef price, or cutout, slipped 22 cents/cwt from Thursday to $190.29. Select cuts were 66 cents higher at $173.59, the U.S. Department of Agriculture said.
Three weeks of higher cash prices have shaved profits for packers, which may prompt them to resist spending more for supplies next week, said traders and analysts.
Average beef packer margins for Friday were a positive $28 per head, down from a positive $40.10 on Thursday and a positive $59.30 a week ago, as calculated by HedgersEdge.com.
CME livestock market participants are monitoring forecasts for colder weather in the U.S. Plains by Wednesday. Frigid temperatures typically slow animal weight gains, which delays their delivery to packing plants.
Technical selling, firmer corn prices and heavy CME live cattle futures losses sank the exchange’s feeder cattle contracts. January feeders ended 3.175 cents/lb. lower at 124.6 cents.
Mostly lower hog market
The CME lean hog December contract benefited from the morning’s firmer cash prices, said traders.
“Hog numbers are evidently a little tighter and packers have great margins, so they’re going to spend it,” a Midwest hog merchant said.
Other contracts felt pressure from the live cattle market selloff and hog futures’ premiums to the exchange’s index for Nov. 30 at 48.8 cents.
December closed up 0.525 cent per pound to 50.75 cents. Most actively-traded February ended down 0.05 cent to 54.025 cents, and below the 20-day moving average of 54.59 cents. April finished 0.3 cent lower at 60.15 cents.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged cattle futures, closing markets, CME, feeder cattle, hog futures, lean hogs, live cattle