Cattle futures tumbled to the lowest close this year, falling through technical boundaries to extend a week of heavy losses.
Contracts for live cattle gave way after dropping past the bottom end of a recent trading range of around $1.12 a pound. In the subsequent selloff, they dropped to a fresh low for the year while some feeder cattle futures fell to their lower daily limit.
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Prices in the cash trade for slaughter-ready cattle also fell, adding to pressure on the futures market. Meatpackers bought 518 head of cattle for an average of $1.15 a pound at the closely watched online Fed Cattle Exchange auction on Wednesday morning. That was down from $1.16 a pound last week.
Meatpackers followed up by buying cattle at $1.15 a pound in southern states and the Plains, 1 to 3 cents lower than last week.
Wholesale beef prices also fell to fresh lows amid a prolonged slump.
Analysts pointed to a decline in open interest in the live cattle futures market since late July as a sign that hedge funds were souring on optimistic bets, amid swelling supplies of market-ready cattle. Funds and other money managers have continually cut their net long position in that market in recent weeks, according to regulatory data.
August-dated live cattle futures fell 2.2% to $1.10 a pound at the Chicago Mercantile Exchange on Wednesday, the lowest close since mid-December. August feeder cattle futures fell 3.1% to $1.41525 a pound, hitting the bottom of its exchange-mandated daily trading band.
Hog futures, meanwhile, rose on Wednesday despite sharply lower pork prices. Wholesale pork fell 2.13 cents to 95.43 cents a pound on Tuesday, with pork bellies sliding over 9 cents. High pork belly prices have recently supported the hog market, though some analysts say there are signs that demand is beginning to soften.
Analysts say hog futures still have room for gains as they try to catch up with the CME lean hog index, which tracks the cash market.
CME August lean hog futures rose 0.7% to 84.125 cents a pound, while the lean hog index was at 86.1 cents a pound on Tuesday.
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(END) Dow Jones Newswires
August 09, 2017 15:10 ET (19:10 GMT)