Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed lower on Monday, pressured by technical selling and last Friday’s drop in prices for slaughter-ready, or cash, cattle, said traders.
October live cattle ended 0.45 cent per pound lower at 106.825 cents, and settled below the 10-day moving average of 107.06 cents (all figures US$). December closed 0.725 cent lower at 106.125 cents, and below the 20-day moving average of 106.21 cents.
Last week packers in the U.S. Plains bought a small number of cash cattle at $104 to $106/cwt, down from mostly $110 a week earlier, said feedlot sources.
A small volume of cash cattle traded last week, but their lower price narrowed the difference between them and the futures market, said David Hales, author of the Hales Cattle Letter.
“One thing that has recently driven cash prices down so hard was futures’ wide discounts to cash that had been maintained all year,” he said.
Investors also attributed softer cash values to diminished post-summer meat grilling demand and plentiful supplies of competing pork and chicken.
Nonetheless, bargain hunting and potential for a seasonal improvement in wholesale beef sales lifted contracts from morning lows.
Bargain buyers also stepped in after futures digested Friday’s mildly bearish USDA monthly Cattle on Feed report that showed August cattle placements hit a four-year high.
CME live cattle market selling and sharply lower cash feeder cattle prices undermined the exchange’s feeder cattle contracts. Most-actively traded October closed 1.325 cents lower at 131.05 cents.
Lower hog market close
Triple-digit U.S. stock market losses triggered fund selling across several commodities, including CME lean hogs, a trader said.
October closed 0.95 cent per pound lower at 53.05 cents, and earlier posted a new contract low of 52.95 cents. December ended down 0.3 cent to 48.6 cents.
Traders said eroding cash prices because of abundant seasonal supplies, and jitters ahead of USDA’s quarterly hog report on Friday, further pressured lean hog futures.
Cash hog prices in the U.S. Midwest on Monday morning were steady to 50 cents/cwt lower, said regional hog merchants.
USDA estimated Monday’s slaughter at 441,000 hogs, 13,000 more than the same period a year ago.
The pork cutout value spike on Monday morning was likely driven by last-minute retail buying ahead of October National Pork month, a trader said.
Monday morning’s U.S. government data showed the wholesale pork price, or cutout, surged $3.10/cwt from Friday to $80.02.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged cattle futures, closing markets, CME, feeder cattle, hog futures, lean hogs, live cattle