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CME update: live cattle futures fall lower on technical selling

11 January 2021

US cattle futures drifted lower on 8 January on light technical selling, with the spot February contract pressured as speculators rolled long positions into forward months.

Reuters reports that CME February live cattle futures settled down 0.500 cent at 114.475 cents per pound.

8 January was the first day of the five-session "Goldman roll" period during which some index funds roll February futures positions forward into April contracts.

"That kept February hogs and cattle under wraps," said Dennis Smith, a broker at Archer Financial Services.

CME March feeder cattle ended down 0.750 cent at 136.825 cents per pound but stayed inside of Thursday's trading range. Traders await direction from key crop reports due 12 January from the US Department of Agriculture. Most analysts surveyed by Reuters expect the USDA to lower its estimates of US corn production and 2020/21 ending stocks.

Rising corn prices hung over the market, signalling higher feed costs. Benchmark Chicago Board of Trade corn traded above $5 a bushel this week for the first time since 2014 before paring gains.

Wholesale beef prices firmed slightly. The choice boxed beef cut-out rose $0.99 to $206.84 per cwt, according to the US Agriculture Department. Select cuts rose by $0.10 to $196.69 per cwt.

But back months in both the hog and cattle markets drew support from speculators steering investments into the commodity sector amid expectations for further government stimulus measures to prop up an economy battered by the coronavirus pandemic.

"We are moving into an inflationary environment," Smith said, adding that the incoming Biden administration "is going to open up the money spigot, big time, and that is bullish commodities; it's bullish hogs and cattle."

Also on 8 January, the USDA reported US November beef and veal exports totalled nearly 277 million pounds, up from 244.7 million pounds a year ago.

Read more about this story here.

Source: Reuters

Top image via Shutterstock



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