Chicago Mercantile Exchange live cattle futures closed sharply lower on Monday on fund liquidation in a technical selloff with spot December ending down 1.24 per cent, traders and analysts said.
Spot December fell to a one-month low in earlier dealings and, though paring losses, still ended near the session low.
A large sell stop was placed which led to a sell-off but traders and analysts gave no fundamental reason for the decline.
Wholesale beef prices, while still high, have retreated from lofty levels as the Thanksgiving holiday approaches, with its focus on turkey and ham.
“It is really a cautious market because it is not a good time of a year for demand. There will not be retail features for beef until the first of the year,” said Lane Broadbent, an analyst at KIS Futures.
The U.S. Department of Agriculture reported Monday morning’s choice beef wholesale price at $200.98 per hundredweight, down 18 cents from Friday. The choice wholesale price is the lowest since $200.97 on Oct. 25.
Beef packer margins descended further into negative territory after packers paid up for cattle in the cash market last week. Packers in Texas and Kansas paid $132/cwt on Friday for slaughter-ready cattle, $1 higher than the previous week.
HedgersEdge reported beef packer margins at a negative $36.50 per head on Monday, down from a negative $29.70 per head on Tuesday and negative $32.55 a week ago.
The selloff in cattle futures occurred amid the report of lucrative profits reported by a key livestock and chicken processor.
Tyson Foods reported a 28 per cent jump in quarterly profit on Monday, helped by higher chicken sales and a rebound in its beef business, and said it expected to benefit from lower grain costs this fiscal year.
Chicago Board of Trade corn futures fell to a three-year low on Monday and some analysts said the market likely would fall further.
CME live cattle December finished down 1.5 cents per pound at 131.9 cents, and February closed at 133.2 cents, up 1.6 cents.
Feeder cattle futures followed CME live cattle futures lower but the weak Chicago Board of Trade corn prices limited losses.
November feeders closed down 0.3 cent at 164.85 cents/lb., and January ended at 164.3 cents, 1.525 cents lower on the day.
Weak cash prices pressure hogs
CME hogs were pressured by weak cash prices while improved wholesale pork cutout values limited losses, traders and analysts said.
Monday morning’s cash hog prices in the closely watched Iowa/Minnesota market were unquoted. But in the eastern direct market prices were at $78.36/cwt, down $1.69 from Friday, USDA said.
Hogs in the U.S. Midwest are traded steady to $1/cwt lower, according to hog brokers.
The government’s Monday morning wholesale pork price rose 72 cents from Friday to $92.69/cwt. Pork bellies, which are made into bacon, rose by $5.24 to $131.76.
December hogs ended up 0.3 cent at 85.6 cents/lb., while February closed up 0.375 cent at 89.9 cents.
— Meredith Davis reports on U.S. ag commodities for Reuters from Chicago.