Bears Pressure Cattle Futures

By Benjamin Parkin Features Dow Jones Newswires

Cattle futures were mixed, closing mostly lower as fund selling continued to weigh on prices.

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December-dated contracts for live cattle closed little changed at $1.16425 a pound at the Chicago Mercantile Exchange. Later-month futures and feeder cattle prices were lower.

Hedge funds and other speculative investors were unwinding recent wagers that cattle prices would rise on concerns demand wouldn't be able to keep up with large supplies, analysts said. Money managers held a net long position of over 120,000 futures and options contracts as of last week, according to the Commodity Futures Trading Commission.

"Funds are actively liquidating long live cattle positions and that is the main reason for the weakness in the futures market since last week," Troy Vetterkind, of Vetterkind Cattle Brokerage, said.

Mr. Vetterkind said lower futures would likely pressure the cash trade for physical cattle this week. Meatpackers last week paid feedlots an average of $120.54 per 100 pounds on live cattle and $189.91 dressed.

But supplies of slaughter-ready cattle are larger this week, analysts said, and lower futures prices would indicate to cash traders that prices are heading lower.

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"Packers were already buying cattle for $118-$119 live late on Friday given the weakness in the futures and I wouldn't doubt the market is $117-$118 this week," Mr. Vetterkind said.

Hog futures also fell. CME December lean hog futures dropped 1% to 64.275 cents a pound.

The hog market is facing supply concerns of its own. Average hog weights have risen in recent weeks, adding to a surplus of red meat, and cash prices have been mixed. That's left traders with limited incentive to push futures higher, analysts said.

Write to Benjamin Parkin at benjamin.parkin@wsj.com

(END) Dow Jones Newswires

December 05, 2017 15:27 ET (20:27 GMT)