Cattle futures sell-off sends nearby contracts plunging - CME

Hog markets end mixed
calendar icon 10 November 2023
clock icon 2 minute read

Chicago Mercantile Exchange (CME) cattle futures fell sharply on Thursday, amid fund liquidation, growing concern over consumer demand and signs of prices falling in the cash market, reported Reuters.

Traders and funds scrambled to shed some of their long positions, after betting the bull market in cattle futures would continue well into the spring, analysts said.

The futures sell-off, said analysts, has been picking up steam since last month's US Department of Agriculture's (USDA) monthly Cattle on Feed report showed larger-than-expected placements of cattle into US feedlots in September.

"We are just melting down in the live cattle market right now," said Karl Setzer, partner at Consus Ag Consulting.

The cash cattle market is weakening, too, with a cash trade on Thursday in the Kansas market at $179 per hundredweight (cwt) - down a whopping $6 per cwt from a week earlier, said Don Roose, president of US Commodities in West Des Moines, Iowa.

Beef packer margins have continued to fall, too, as cattle slaughter pace slowed and packers losing $103.50 per head on Thursday - a bigger loss than Wednesday and a week earlier.

Meanwhile, CME hog futures were mixed. On Thursday, the USDA's weekly pork export report showed an increase of sales and China as the main pork buyer, which gave support to futures early in the session.

But the trade became choppy later in the day on news that China's consumer prices swung lower in October, as key gauges of domestic demand pointed to weakness not seen since the pandemic, analysts said. Pork prices continued to slump, being down 30.1%, amid an oversupply of pigs and weak demand.

CME December hog futures settled 0.050-cent lower at 71.45 cents per pound.

CME December live cattle futures slumped 5.050 cents to settled at 174.350 cents per pound. January 2024 feeder cattle futures settled down 7.850 cents at 224.925 cents per pound.

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