Tuesday, October 19

CME cattle futures extend slump; hogs mixed after strong week

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CHICAGO — Chicago Mercantile Exchange (CME) live cattle futures closed lower on Friday, extending their slide for a sixth session on lackluster cash cattle trade and falling wholesale beef prices, traders said.

CME October live cattle futures settled down 0.175 cent on Friday at 120.400 cents per pound while the benchmark December contract fell 0.525 cent to end at 125.200 cents.

Feeder cattle futures closed narrowly mixed with most-active November ending unchanged at 152.900 cents per pound.

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Cash trade in market-ready cattle this week was roughly steady with recent weeks, with fat cattle trading at $121 to $124 per hundredweight in the southern Plains.

Meanwhile, wholesale beef prices have been in retreat since late August. Choice cuts fell another $2.62 per cwt on Friday to $292.36 per cwt and select cuts fell $4.48 per cwt to $264.84 per cwt, according to the US Department of Agriculture.

“With beef prices weakening, the packers really have no incentive to pay up for cash cattle,” said Dan Norcini, an independent trader. “All the bargaining power is in the hands of the packers, and they are taking full advantage,” Norcini said.

On the hog side, CME lean hog futures closed mixed in a consolidation after rocketing higher this week on quarterly USDA data released Sept. 24 that showed smaller-than-expected US hog supplies.

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“There is still a spillover effect from that bullish quarterly hogs & pigs report. The funds are heavy buyers, using the bullish surprise in the report as the catalyst,” Norcini said, noting rising open interest in hog futures this week.

CME October lean hogs settled up 0.700 cent at 92.300 cents per pound while the most-active December contract fell 0.225 cent to end Friday at 85.175 cents.

Still, for the week, December hogs gained 8.375 cents or 11%.

“You’ve got good foreign (pork) export demand, and apparently good domestic demand as well, and you have fewer hogs,” Norcini said. (Reporting by Julie Ingwersen Editing by Sonya Hepinstall)


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