Cattle Futures Tumble as Funds Sour on Beef
Cattle futures ended the week sharply lower as hedge funds and other speculative investors unwound optimistic bets.
Futures traders spent much of the week anticipating higher cash prices for physical cattle. But higher cash prices did little to stem the selling in the futures market.
December live cattle futures fell 2.2%, to $1.17225 a pound, at the Chicago Mercantile Exchange, with a number of contracts close to or at their lower daily limits. Feeder cattle futures were also sharply lower.
Much of the selling pressure came as money managers, who are holding a large net long position in the live cattle market, reacted to chart patterns suggesting that prices were headed lower, said Craig VanDyke of Top Third Ag Marketing.
"The market didn't seem excited about higher cash," Mr. VanDyke said. "Overall, the market has started to form a downtrend out of November into now."
The cash trade was higher than a week earlier, with meatpackers mostly paying $120 to $121 per 100 pounds on a live basis and $190 dressed. The sales started to surface late Thursday and continued into Friday.
Money managers held a net long position of 123,535 futures and options contracts in the live-cattle market as of Nov. 21, the most recent week for which data was available, according to the Commodity Futures Trading Commission. The CFTC is expected to update those figures on Friday afternoon.
Hog futures rose, with the CME December lean hog contracts 1.6% higher, at 65.275 cents a pound.
That market has traded sideways this week despite rising cash and wholesale pork prices. Hog futures could also be succumbing to some of the speculative selling that has weighed on the cattle market, said Troy Vetterkind of Vetterkind Cattle Brokerage.
"If the managed money accounts want to trim their length in cattle and hogs and put that money to work in other cheaper markets," Mr. Vetterkind said, "this could be a major headwind for cattle and hogs going into the first quarter of next year."
Write to Benjamin Parkin at benjamin.parkin@wsj.com
(END) Dow Jones Newswires
December 01, 2017 15:17 ET (20:17 GMT)