U.S. live cattle futures fell more than one per cent on Thursday as investors took profits and funds liquidated long positions after the market dropped below key technical support levels, said analysts and traders.
R.J. O’Brien floor manager James Brooks described the future’s selloff on Thursday as technical-related, with short-term funds the prime sellers.
Chicago Mercantile Exchange (CME) spot October live cattle dropped under the 200-day moving average of 126.12 per hundredweight (cwt). Most-actively traded December slipped beneath the 1- and 20-day moving averages at 126.79 and 126.43 cents (all figures US$).
October closed 0.45 cent per pound lower, or 0.36 per cent, at 125.75 cents. December ended at 125.65 cents, 1.425 cent lower or 1.12 per cent.
Although cash cattle traded at $127/cwt, steady with a week ago, some traders were let down after feedlots were unable to receive $128 for their animals.
Also, wholesale choice beef prices may struggle to sustain upward momentum as it approaches the psychological benchmark of $200/cwt.
The wholesale price for choice beef Thursday morning was up 20 cents/cwt from Wednesday to $199.58, but shy of the $201.18 record set on Oct. 16, 2003.
"Beef is in rarified air and trying to top out as we get closer to Thanksgiving when we feature hams and turkeys," said U.S. Commodities analyst Don Roose.
"Futures traders were also looking for steady-to-higher cash and instead it was steady, so there was some disappointment there," he said.
CME feeder cattle drew pressure from the lower live cattle market and technical selling.
Spot October feeder cattle, which expired today at noon CDT, settled down 0.125 cent or 0.09 per cent to 145.3 cents/lb. Most-actively traded November closed 1.125 cents lower, or 0.76 per cent, to 146.050 cents.
Hog futures turned lower on weaker cash hog prices after wholesale pork demand slowed amid ample supplies, said traders and analysts.
They said packers are less likely to aggressively buy hogs this week after their margins turned negative.
December closed off 0.125 cent/lb., or 0.16 per cent, at 78.125 cents. February ended at 84.275 cents, down 0.4 cent or 0.47 per cent.
The average hog price in the Iowa/Minnesota market Thursday morning was down 32 cents/cwt from Wednesday to $83.04, USDA said.
HedgersEdge.com showed Thursday’s pork packer margin at negative $1.35 per head, their first loss per head since 10 cents on Aug. 23. It also compared with positive $2.25 on Wednesday and positive $9.50 for Oct. 18.
From Monday to Thursday, packers processed 1.735 million hogs, up 4,000 from a week earlier and 17,000 more than the same period a year ago.
— Theopolis Waters writes for Reuters from Chicago.