U.S. livestock: CME live cattle sink on fund liquidation, technical selling

Lean hog futures close mixed

cme june live cattle
CME June 2019 live cattle with 20-, 50- and 100-day moving averages. (Barchart)

Chicago | Reuters — U.S. live cattle futures fell on Tuesday, with the actively traded June contract down for a seventh straight session, as fund long liquidation and technical selling pressured the market.

Before the latest selloff in cattle began, commodity funds had built a record large net long position, and open interest in the market had reached the highest on record.

Rainy weather and unseasonably chilly temperatures around large parts of the United States has, meanwhile, blunted demand for outdoor grilling of beef and other proteins, while supplies have remained abundant. Recent stressful weather in some feedlot areas had raised concerns about large weight losses in cattle.

“There is no shortage of cattle out there and the weight loss that everybody thought we would see has not materialized,” said Jeff French, analyst with Top Third Ag Marketing.

“Right now the money flow is wanting to get out of their positions and this selloff could just be beginning,” he said, referring to managed commodity funds.

Chicago Mercantile Exchange (CME) June live cattle futures settled down 0.55 cent at 114.250 cents/lb., the contract’s lowest since Dec. 7. August live cattle ended down 0.775 cent at 111.775 cents/lb.

Feeder cattle futures followed live cattle futures lower as funds liquidated long positions and as corn prices edged upward on worries about rain-delayed U.S. planting.

August feeder cattle fell 1.925 cents to settle at 149.15 cents, a near-three-month low. May feeders, which expire next month, hit a contract low and settled down 1.8 cents at 141.6 cents.

Lean hog futures were mixed as traders consolidated positions following a multi-session slide.

Funds have also been liquidating long holdings on hogs, but the market has been supported at times by strong prospects for exports to China.

The world’s largest hog and pork market has been culling hogs to try to control a severe outbreak of African swine fever. Losses from the disease, deadly for hogs but not humans, is expected to bolster China’s pork imports this year.

But in what could pose a challenge to U.S. pork exporters, China has approved Argentine pork for export.

CME June lean hogs ended up 0.175 cent at 88.225 cents/lb. and July futures fell 0.175 cent to 92.375 cents.

— Reporting for Reuters by Karl Plume in Chicago.

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