Cattle sell-off resumes as wholesale beef prices fall - CME

Lean hog futures close mostly lower
calendar icon 7 December 2023
clock icon 2 minute read

Live cattle futures on the Chicago Mercantile Exchange (CME) tumbled 3% on Wednesday to multi-month lows as selling pressure tied to demand worries resumed, after a brief relief rally on Tuesday, reported Reuters.

Cattle futures have been falling for most of the last three months, retreating from historic highs set in mid-September. Traders attributed Wednesday's plunge to a drop in wholesale beef prices that signalled weak consumer demand for high-priced cuts of meat, along with fund-driven selling.

Benchmark CME February live cattle settled down 5.425 cents at 163.550 cents per pound after falling to 162.550, the contract's lowest in nearly 14 months. Front-month December cattle ended down 5.050 cents at 163.450 cents after hitting 163.025, the lowest on a continuous chart of the nearby contract since mid-May.

CME January feeder cattle settled down 4.550 cents at 210.150 cents per pound.

The US Department of Agriculture (USDA) priced choice cuts of beef at $290.56 per hundredweight (cwt) on Wednesday afternoon, down $3.19 from Tuesday and the lowest in eight months.

"That probably led to the same issue that we have been dealing with for some time now – fears related to the demand side of the beef equation," said Dan Norcini, an independent trader.

Market-ready cattle traded in cash markets at $171 per cwt in Kansas and Texas, down $3 to $4 from last week, brokers said. But that price was above the equivalent value of nearby December cattle futures at roughly $163 per cwt.

Managed commodity funds have been big sellers in recent weeks, slashing their net long position in CME live cattle futures from about 100,000 contracts in late September to less than 33,000 lots as of Nov. 28.

CME lean hog futures closed mostly lower on Wednesday, with February hogs edging down 0.050 cent at 69.300 cents per pound.

The USDA priced pork carcasses on Wednesday afternoon at $83.20 per cwt, down $1.47 from Tuesday.

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