Friday October 24, 2014




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U.S. live cattle futures slump on fund liquidation

Hogs fall on cash, pork price uncertainty

Chicago Mercantile Exchange live cattle futures turned sharply lower on Friday pulled down by fund liquidation, traders and analysts said.

They said futures felt more pressure from profit-taking after recent market advances.

"Profit-taking got the ball rolling during the quiet session, then funds chimed in after we fell through moving averages," a trader said.

CME live cattle fell 4.5 per cent for the week, its biggest weekly drop since 6.2 percent for the week ended May 8, 2011.

June closed at 121.825 cents, 1.825 cents per pound lower. It finished below the 40-day moving average of 122.04 cents.

August ended 1.9 cents lower at 121.975 cents, settling beneath the 20-day moving average of 122.17 cents.

Futures' retreat on Friday partially erased early-week gains driven by steady-to-higher cash cattle prices amid tight supplies.

Cash cattle in Texas and Kansas sold at $128 to $129 per hundredweight (cwt), steady to $1 higher than last week, feedlot sources said. Live-basis cattle in Nebraska fetched $130 to $131, steady to up $3 from a week ago, they said.

The beef cutout flirting with record highs lent further cash support. Grilling in parts of the country, Mother's Day restaurant bookings and preparation for the May 27 U.S. Memorial Day holiday sparked beef demand.

The wholesale price of choice beef, or cutout, Friday morning rose 27 cents/cwt to $200.85/cwt, closing in on the Oct. 16, 2003 record of $201.18. Select cuts slipped 37 cents to $190.27, according to the U.S. Department of Agriculture.

Because the beef cutout is in rarefied air, there is concern that it could choke off demand at the retail level, analysts and traders said.

Feeder cattle futures sank with live-cattle market losses and technical selling. CME feeder cattle ended the week down 1.1 per cent.

May feeder cattle closed at 138.775 cents, 1.825 cents/lb. lower. And August settled down 2.15 cents to 147.5 cents.

Hogs bow to uncertainty

Mixed cash prices and volatile wholesale pork values pressured CME hog futures, analysts and traders said.

Still, CME hogs rose 2.4 per cent for the week, the fourth straight week of gains.

CME June hogs settled down 0.65 cent at 92.175 cents/lb. and July closed at 92.3 cents, 0.725 cent lower.

Packers are expected to curtail slaughter and lower cash hog bids next week to realign their margins and offset tightening supplies, a trader said.

The government estimated this week's slaughter at 2.098 million head, 50,000 less than last week.

USDA reported a weaker average hog price in the western Midwest direct market but firmer in the eastern sector.

U.S. pork packer margins on Friday were estimated at a negative $3.95 per head versus a negative $6.45 on Thursday and a positive $6.20 a week ago, according to HedgersEdge.com.

And USDA's Friday morning mandatory wholesale pork price, calculated on a plant-delivered basis, was $87.84/cwt. That was up $1.13 from Thursday after being down $2.10 from Wednesday.

-- Theopolis Waters
reports for Reuters from Chicago.


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