November 6, 2017 / 9:41 PM / in a year

LIVESTOCK-Profit-taking undercuts CME live cattle futures

    By Theopolis Waters
    CHICAGO, Nov 6 (Reuters) - Chicago Mercantile Exchange live
cattle closed lower on Monday, hit by profit-taking after last
week's sharply higher cash prices drove some trading months up
by their 3-cents per pound daily price limit on Friday.
    Funds "rolled" the December contract and simultaneously
bought deferred ahead of similar moves on Tuesday.
    Tuesday is the first of five days when funds in CME's
livestock markets that follow the Standard & Poor's Goldman
Sachs Commodity Index           sell, or "roll," December long
positions mainly into February and April contracts.
    December         live cattle finished 1.975 cents per pound
lower at 125.325 cents, and February         ended 1.100 cents
lower at 130.650 cents.
    Live futures will resume its normal 3-cent trading limit on
Tuesday after failing to close up or down Monday's 4.500-cent
expanded limit.
    Potential investors may be content to observe the roll from
the sidelines while waiting for this week's cash cattle trade to
    "I'd imagine people are sitting back given the fact that
nobody knows, with a whole lot of confidence, anything in this
cattle market," said Allendale Inc chief strategist Rich Nelson.
    Packers last week paid $122 to $126 per cwt for
slaughter-ready, or cash, cattle in the U.S. Plains. That was up
as much as $10 from the week before, thanks to improved
wholesale beef prices and good packer profits.
    However, those strong cash prices trimmed packer profits
that, along ample supplies of cattle contracted against the
futures market, threaten this week's cash returns.
    Live cattle futures selling and investors pocketing profits
pressured CME feeder cattle. Higher cash feeder cattle prices
limited futures losses.
    November         feeder cattle closed down 0.725 cent per
pound at 160.150 cents.
    Slumping cash prices and Monday morning's soft wholesale
pork values weighed on the December CME lean hog contract, said
    They said the roll by funds further pressured December
futures but supported deferred contracts.
    December         hogs ended 0.475 cent per pound lower at  
64.625 cents. February         closed up 0.250 cent at 72.225
cents and April         finished up 0.150 cent to 75.600 cents.
    Futures appear to be holding up well despite the recent cash
price decline as packers work to grow their margins, a trader
    More hogs should come to market after farmers wrap up
harvesting corn and soybeans soon, a Midwest hog merchant said.
Animals weights should increase as more palatable, nutrient rich
new-crop corn enters feed rations, he added.

 (Reporting by Theopolis Waters; Editing by Tom Brown)
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