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Cattle, pig futures slump on macroeconomic concerns – CME

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Cattle, pig futures slump on macroeconomic concerns – CME

September 23, 2022

Traders are worried about raising interest rates

Chicago Mercantile Exchange (CME) futures closed lower on Thursday, extending the pullback from four-month highs set this week as traders worried about the health of the global economy and waning beef demand, Reuters reported, citing traders.

Live cattle for October CME ended 1.025 cents lower at 144.850 cents a pound and the most active December contract fell 1,400 cents to settle at 149.350 cents a pound, falling below chart support at the 50-day moving average.

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Chicago Mercantile Exchange bovine feed futures for November fell 2.275 cents to settle at 178.050 cents a pound.

Livestock traders were digesting news of the Federal Reserve’s move on Wednesday to raise interest rates and its anticipation of more big hikes to come as it battles inflation.

Concerns about the economy have raised uncertainty about consumer demand for expensive cuts to beef. Wholesale beef prices fell Thursday afternoon, with selection down 73 cents to $248.40 a weight (cwt), the lowest since March 2021, according to the U.S. Department of Agriculture (USDA).

In the cash market, Southern Plains fat cattle were trading at $143 per ton, up $1 from the bulk of last week’s trade. While flat cash cattle prices tend to support futures, traders note that October spot futures, which are hovering near the equivalent of $145 per ton, carry a slight premium to cash, which is a bearish sign.

After the futures market closed, the USDA reported US frozen beef stocks as of August 31 at 515.7 million pounds, up 24% from last year, a factor that could weigh on futures.

Ahead of Friday’s monthly Cattle on Feed report, analysts polled by Reuters on average expect the U.S. Department of Agriculture to report the number of cattle in the U.S. feedlot at 11.234 million heads as of Sept. 1, flat from a year earlier. Marketing for August was seen at 105.9% from the previous year while placements were seen at 97.3% from last year.

Lean pig futures fell on the Chicago Mercantile Exchange on Thursday, pressured by this week’s robust pig slaughter pace and macroeconomic concerns.

“The seasonal increase in hog supply, and the fact that this week’s hog slaughter exceeded last year’s by a reasonable amount, is definitely a downside to the market,” said Doug Hutton, analyst at Brooke Capital Management.

October’s lean hogs on the Chicago Mercantile Exchange settled down 0.300 percent at 94.125 cents per pound, and December’s benchmark hogs were down 0.775 percent to close at 85,675 cents a pound, falling below support at the 40 and 50-day moving averages.

Traders await the USDA’s September 29 quarterly report on pigs and pigs.

Source: Reuters