CME Feeder Cattle Futures 3-month Low on Fund Selloff; Hogs Lower

Chicago Mercantile Exchange feeder cattle futures on Tuesday hit a three-month low, led by fund liquidation after contracts slipped beneath chart support levels, said traders.

CME live cattle market selling, and as much as $5 per cwt lower cash feeder cattle prices, pressured the market, they said.

January feeder cattle closed 2.125 cents per pound lower at 147.825 cents, and below the 100-day moving average of 148.888 cents.

Mostly Lower Live Cattle Futures

Sell stops and expectations for weaker cash prices pressured CME live cattle futures, except December that was partly supported by higher wholesale beef values, said traders.

December live cattle finished up 0.050 cent per pound at 116.425 cents. February ended 0.650 cent lower at 120.525 cents, and April finished 0.875 cent higher at 121.525 cents.

Investors await Wednesday's Fed Cattle Exchange sale of 653 animals to set the tone for this week's overall cash trade.

Last week slaughter-ready, or cash, cattle in the U.S. Plains brought $119 to $121 per cwt.

Packers may grow their margins and reduce their need for supplies by cutting slaughter rates, said traders and analysts.

Roughly 25,000 more cattle for sale than last week and the seasonal pullback in beef demand ahead further threatens near-term cash prices, they said.

"The packer is coming into this week with 125 percent larger purchased inventory than last week, which we suspect will tend to limit the price competition between packers for this week’s buy," said Hales Cattle Letter author David Hales. 

Hogs Turn Lower

CME lean hogs gave back some of Monday's gains, led by profit-taking and uncertainty about hog supplies moving forward, said traders.

The December contract, which will expire on Dec. 14, was guided by the exchange's hog index for Dec. 1 at 63.92 cents.

December hogs ended 0.675 cent per pound lower at 64.275 cents. February closed 1.175 cents lower at 70.500 cents.

On Tuesday a few processors raised bids for hogs to round out this week's slaughter schedule while keeping pace with their impressive margins, a trader said.

But a Midwest packing plant that was offline last week for equipment installation backed animals up on farms in the region, which could pressure cash prices, said analysts.

They added that plants that were closed over the Thanksgiving holiday, and those planning to shutdown for Christmas and New Year's, imply a significant backlog of hogs ahead.