Cattle Fall for 3rd Session on Technicals, Fears of Lower Beef

U.S. live cattle futures declined for the third straight session on Thursday, pressured by technical selling linked to worries that rising wholesale beef prices were nearing a seasonal peak, traders and analysts said.

Both live cattle and feeder cattle futures touched their lowest in about two weeks, before trimming losses. Lean hogs were mostly lower at the Chicago Mercantile Exchange.

Demand for cattle in cash markets remained robust as beef packers took advantage on the highest wholesale beef prices since 2015. Retailers were stocking meat cases ahead of the U.S. Memorial Day holiday on May 29 - the unofficial start of the summer outdoor grilling season.

However, beef prices typically ease as buying slows following the holiday. The U.S. Department of Agriculture after the close of trading said choice-grade wholesale beef was up $2.28 at $246.85 per cwt.

CME June live cattle settled 0.275 cent lower at 123.925 cents per pound and August cattle eased 0.725 cent to 119.675 cents.

"The chart looks miserable and the new lows for the move kept the buyers shy," Schwieterman Inc broker Domenic Varricchio said of cattle.

Investors continued to roll out of June cattle and hog positions and into deferred months. That "roll" was highlighted by a drop of 13,681 contracts in June cattle and an open interest increase of 8,731 new positions in August cattle during Wednesday's session, CME Group data showed on Thursday.

CME August feeder cattle were down 1.600 cents to 147.325 cents per pound.

CME June hogs were down 0.150 cent to 77.050 cents and July hogs down 0.200 cent to 77.075 cents. The CME Group's index of the U.S. cash hog market climbed 67.64 cents, highest in a month. Cash hogs' discount to futures weighed on CME hog futures, Varricchio said.

"June's just a little too far above the index," he said, pointing to the nearly 10-cent premium in futures. 

USDA said wholesale pork was up 73 cents to 81.85 cents per pound, led by a spike in pork belly prices.

 

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