Chicago | Reuters — Chicago Mercantile Exchange feeder cattle sank on Wednesday to a four-month low, hit by a selloff in live cattle futures as well as expectations for increased supplies, said traders.
“You’ve got this cattle report coming out on Friday, and everybody says placement numbers are going to be up,” said JRS Consulting owner Jack Salzsieder.
Analysts, on average, expect Friday’s monthly Cattle on Feed report from the U.S. Department of Agriculture (USDA) to show a 5.7 per cent bump in the number of cattle placed in feedlots last month compared to November 2016.
January feeder cattle closed 3.425 cents/lb. lower at 141.775 cents (all figures US$).
Live cattle slump before report
Fund liquidation and positioning before Friday’s USDA cattle report weighed on CME live cattle futures, traders said.
Cash prices traded generally steady on Wednesday, limiting losses in December futures.
December live cattle finished down 0.6 cent/lb., to 119.4 cents, and below the 40-day moving average of 119.85 cents. February ended 1.5 cents lower at 118.95 cents, and below the 10-day moving average of 119.248 cents.
A few animals at Wednesday’s Fed Cattle Exchange brought $120/cwt, up $4 from last week’s light trade there.
Packers in the U.S. Plains paid mostly $120/cwt for slaughter-ready, or cash, which is consistent with mainly $120 sales last week, according to feedlot sources.
Tight supplies in parts of the country underpinned cash prices, but some processors avoided paying more than they had to because of seasonally slack beef demand.
Overall meat demand this time of year typically takes a back seat to Christmas celebrations and shoppers paying off year-end holiday debt later on, analysts and traders said.
Hog futures rally
Firmer cash hog and wholesale pork prices rallied CME hogs from recent lows, said traders.
Short-covering and technical buying gave hog futures an added lift, they said.
Investors awaited Friday’s USDA quarterly hog report that is expected to show further herd expansion.
February hogs finished up 1.475 cents/lb., at 68.375 cents, and April closed 1.275 cents higher at 72.95 cents. Both contracts settled above their respective 10-day moving average of 67.673 and 72.212 cents.
Four new plants this year forced packers to compete for hogs when they usually pay farmers a lot less for them before plants close for the winter holidays, a Midwest hog dealer said.
Week-over-week lighter animal weights suggest farmers are quickly moving pigs to market, he said, which could result in fewer of them later — a positive for cash prices.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.