Chicago Mercantile Exchange live cattle futures turned lower on Thursday in a technical selling and profit-taking setback and on concerns of a slowdown in beef demand in the storm-hit eastern United States, traders said.
A winter storm continued its march up the U.S. East Coast on Thursday, with blizzard warnings from North Carolina to Maine. The harsh weather along the East Coast followed severe cold in cattle producing areas of the U.S. Plains which drove cattle prices higher on worries about slowed weight gains at feedlots.
Plains temperatures, however, are expected to turn warmer over the coming days, prompting the market to shed its weather risk premium.
“The cold snap weather story is slowly subsiding. Amarillo, Texas, is expected to be back up to 60 degrees in the coming days,” said Rich Nelson, chief strategist with Allendale Inc. “And with the storm on the East Coast, any time we have our top demand center not able to get to restaurants or grocery stores, that’s bearish,” he added.
Adding to the pressure was a weekly U.S. Department of Agriculture report on Thursday that upwardly revised average steer and heifer weights for cattle slaughtered two weeks ago.
That, Nelson said, muted the weight loss impact of the recent frigid Plains weather.
CME February live cattle futures ended 0.700 cent per pound lower at 122.250 cents, while April futures settled down 0.550 at 123.825 cents.
Funds periodically sold, or “rolled,” lead-month positions into deferred months ahead of similar moves early next week.
Monday will be the first of five days that funds in CME’s livestock markets, which track the Standard & Poor’s Goldman Sachs Commodity Index , roll February long positions primarily into the April and June contracts.
Feeder cattle futures followed live cattle lower, propelled by technical selling and profit taking after posting one-month highs early in the trading session.
January feeders settled down 0.350 cent per pound at 149.025 cents and actively traded March ended down 1.275 at 145.550 cents.
CME lean hog futures climbed for a second consecutive session, supported by stronger cash market prices.
Cash hogs in the closely followed Iowa and southern Minnesota market traded $2.15 higher on Thursday after gaining $1.99 the prior day, according to USDA.
February hogs settled up 0.325 cent per pound at 71.375 cents. April ended 0.675 cent higher at 76.100 cents.