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CME: Weather and Rising Dollar Leave Futures Lower, Tuesday

20 March 2013

US - Live cattle futures ended 25 to 75 cents lower on Tuesday, which was near the middle of the day's range for most contracts, write market analysts at ProFarmer.

Cattle futures were choppy early, but softened ahead of midday as the U.S. dollar strengthened. Demand concerns continue to hang over the market and a rising dollar has traders concerned exports could be hurt.

June cattle fell sharply after the mid-session and traded as low as 120.10 before closing near 40 lower at 120.97. April closed 75 lower at 125.30 but up 45 from the late-session lows.

Traders remain nervous that consumer-friendly weather for beef consumption is still weeks away given the cold outlook on the 6-10 and 8-14 day forecast models and the aggressive fund-trader selling in feeder cattle to drive the market to a new contract low led futures lower late in the day.

Traders await a normal boost in consumer demand when the weather in the central and eastern US warms up in late March and early April but the forecast is not cooperating, write experts at the Chicago Mercantile Exchange.

Beef prices have pulled back from last week's highs and traders are nervous that packers will not pay up for cattle without a more promising weather outlook to feature beef.

The volume of trade in the beef market is also slow; especially Friday. Cash traded $1.00-$2.00 lower in the week last week at $126-$127. There is also talk that there are a few more cattle available in the showlist this week.

Declining open interest on the break over the past week also has traders nervous over possible long liquidation selling ahead.

Boxed-beef cut-out values at mid-session came in at $195.68, down 16 cents on the session and down from $197.28 last week at this time.

Cattle slaughter came in slightly below trade expectations at 120,000 head.

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