Monday, December 11, 2023

LIVESTOCK-CME live cattle futures sag on long liquidation, rising grains

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By Julie Ingwersen

CHICAGO, Jan 17 (Reuters)Chicago Mercantile Exchange live cattle futures fell on Tuesday, on spillover weakness from feeder cattle futures and long liquidation as market players responded to a hefty net long position held by commodity funds, analysts said.

CME February live cattle LCG3 settled down 0.725 cent at 157.0 cents per pound and April futures LCJ3 fell 0.800 cent to 160.100 cents.

March feeder cattle futures FCH3 tumbled 1.575 cents to finish at 181.300 cents per pound, pressured by rising costs for corn, the main U.S. cattle feed grain. Chicago Board of Trade March corn CH3 hit a two-month top on follow-through strength from last week’s bullish U.S. government supply/demand reports. COR/

“Any time you get the grain market moving higher like this, I think you are going to get a weaker cattle market, and to some extent, the hog market as well,” said Sherman Newlin, an analyst with Risk Management Commodities.

Others attributed the selling to fund-driven long liquidation. Data from the U.S. Commodity Futures Trading Commission (CFTC) on Friday showed that managed funds expanded their in live cattle futures to nearly 92,000 contracts in the week to Jan. 10, the largest since May 2019, leaving the market prone to bouts of long liquidation.

In the hog market, CME lean hog futures closed mixed. The spot February contract LHG3 ended down 0.200 cent at 78.450 cents per pound while April futures LHJ3 rose 0.850 cent to settle at 88.125 cents per pound. Deferred contracts ended higher as well.

In contrast to cattle, CFTC’s report showed managed funds slashed their net long position in CME lean hog futures by 57% in the week to Jan. 10, to 21,437 contracts, priming the market for a bounce.

Wholesale pork prices fell. The U.S. Department of Agriculture said the pork cutout PRK-MAN-CARCS dipped to $77.44 per hundredweight (cwt) on Tuesday, down $3.15 from Monday and the lowest in two years.

(Reporting by Julie Ingwersen)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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