CME update: cattle futures extend their slide as corn prices surge higher

US cattle futures closed lower on 22 April for the tenth time in the last eleven sessions, pressured by fund-driven long liquidation and soaring corn prices that threaten cattle feeders’ profits.
calendar icon 23 April 2021
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Reuters reports that Chicago Mercantile Exchange June live cattle futures settled down 1.400 cents at 115.850 cents per pound.

CME August feeder cattle futures ended down 3.550 cents at 148.375 cents per pound, pressured as Chicago Board of Trade corn futures climbed their daily limit and neared an eight-year high above $6 a bushel.

Rising prices for corn, the main cattle feed grain, could prompt feedlot operators to cut their losses by selling cattle more aggressively to meat packing houses.

"Feedlots have lost all leverage when bargaining with packers. They just want to move the cattle out of the lot as soon as they can, to minimize the expense," said Dan Norcini, an independent trader.

Meanwhile, commodity funds hold a net long position in CME live cattle futures, leaving the market vulnerable to bouts of long liquidation.

The sell-off in cattle futures comes despite rising wholesale beef prices. Choice cuts of boxed beef rose $1.85 at $282.31 per cwt on Thursday, a 10-month high, and select cuts were up $1.81 at $273.69 per cwt, according to the US Department of Agriculture.

After the close, the USDA's monthly Cold Storage report showed frozen beef stocks falling to 483.650 million pounds, down 4% from a year ago.

Traders await the USDA's monthly cattle-on-feed report on 23 April. Analysts surveyed by Reuters on average expect the USDA to show a 33.7% increase in the number of cattle placed in US feedlots in March compared with the previous year.

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Source: Reuters

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