Chicago Mercantile Exchange live cattle futures settled narrowly mixed on Monday pressured by profit-taking and fund long liquidation, while expectations of steady cash trade lent support, traders said.
Funds adjusted positions to exit long positions ahead of first notice day on Dec. 9., traders said.
Some investors sold the December contract, which expires Dec. 31, and bought deferred months which lent support to the February and April contracts, traders said.
Cash cattle prices have hovered at or near record prices in recent months. Market sentiment that cash cattle will trade at least steady, maybe higher, this week lent support to live cattle futures.
Last week, beef packers paid $132 per hundredweight (cwt) for cattle in the U.S. Plains, up $1 from the previous week’s trade, feedlot sources said (all figures US$). U.S. Department of Agriculture data showed some sales at $133/cwt in Nebraska, up $2 from the previous week.
Investors await a current tally for this week’s list of cash cattle for sale, but it could be smaller, analysts said.
Traders have their eyes on the weather as a cold snap was forecast for later this week across the U.S. Midwest and Plains, which could slow cattle weight gains.
The U.S. Department of Agriculture’s Monday morning wholesale beef price, or boxed beef, was $202.76/cwt for choice cuts, up 12 cents from Friday. Select cuts rose 52 cents to $190.93/cwt.
December cattle futures settled down 0.225 cent at 133.25 cents per pound. February cattle settled up 0.025 cent at 134.275 cents.
Feeder cattle futures settled narrowly mixed. Front-month January feeder cattle followed live cattle futures lower while weak corn prices limited losses.
January feeder cattle settled down 0.125 cent at 165.35 cents/lb., and March settled unchanged at 165.675.
CME hogs end mixed
CME hog futures settled narrowly mixed as higher wholesale pork prices and strength in the cash market lent support to the front-month December contract, traders said.
Cash hog prices in the closely watched Iowa/Minnesota direct market were not available early on Monday, but U.S. Midwest hog brokers expected a steady to $1 higher cash trade.
A higher wholesale pork price also lent support to the front-month contract, said Craig Turner, commodities broker at Daniels Trading.
USDA reported the wholesale pork price, or cutout, at $91.73/cwt, up $1.92 from Friday.
Some analysts have said there is uncertainty in the market regarding the amount of market-ready hogs available in coming weeks as packers continue to slaughter record-heavy hogs at a steady pace.
“I have heard concerns about hog supply, not just for this year but the beginning of 2014. There is nothing in the hog industry that is showing shortage right now,” Turner said.
“I think where the concern comes in is the porcine epidemic diarrhea virus (PEDv) and no one really knows how much it is going to affect slaughter rates,” he said.
Industry officials and market participants alike continue to monitor the spread of PEDv, a fatal piglet disease, as it could reduce 2014 hog supplies.
December hog futures settled up 0.35 cent at 86.025 cents/lb. February hogs closed down 0.125 cent at 90.45 cents.
— Meredith Davis reports on U.S. ag commodities for Reuters from Chicago.