September 6, 2019 / 10:56 PM / 2 months ago

LIVESTOCK-U.S. live cattle futures near three-year low on weak cash prices

CHICAGO, Sept 6 (Reuters) - Front-month live cattle futures on the Chicago Mercantile Exchange fell their daily limit on Friday, dipping to the lowest level since 2016 as traders reacted to weak cash cattle prices, brokers said.

Cash cattle traded at $100 per cwt this week in Texas and Kansas, traders said, down from $103 last week. And wholesale beef prices continued to slide following the U.S. Labor Day holiday, the last major grilling holiday of the summer.

The U.S. Department of Agriculture late on Friday quoted choice boxed beef cutout BEEF-US-CH at $227.31 per cwt, down $2.11 from Thursday and well off a two-year high of $241.74 on Aug. 22. USDA said select cutout fell $2.53 Friday to $201.94.

“It’s obviously the cash market weakness - $3 lower in Kansas and quite a bit lower on a dressed basis in Nebraska,” Brock Associates analyst Doug Houghton said of Friday’s sell-off.

CME October live cattle futures fell the daily 3-cent limit to settle at 94.875 cents per pound, a contract low and the cheapest on a continuous chart of front-month cattle futures since Oct. 14, 2016.

CME Group said it would expand limits in live cattle futures for Monday’s trade to 4.5 cents per pound.

Technical selling accelerated after the October contract on Thursday dipped below its mid-August low of 97.775 cents.

“The weakness was set up when we broke out to the downside of the trading ranges,” Houghton said.

Feeder cattle futures followed the weaker trend, with CME October feeders ending down 1.425 cents at 130.900 cents per pound.

Like live cattle, CME lean hog futures also posted limit declines Friday as plentiful near-term hog supplies pressured cash values and demand from China remained lackluster.

CME October lean hog futures settled down 2.800 cents at 63.500 cents per pound and December fell its 3-cent limit to 62.475 cents. Daily limits in hogs will widen to 4.5 cents for Monday’s trade.

The USDA reported export sales of U.S. pork in the week to Aug. 29 at 17,700 tonnes, down 38% from the previous week. The total included 1,400 tonnes earmarked for China. Some traders have been expecting China to import more pork as it struggles with a meat shortage due to the spread of African swine fever in its hog herd, the world’s largest.

But the U.S. trade war with China has impeded sales of U.S. pork to the Asian country. A new round of U.S. tariffs on Chinese goods took effect on Sept. 1.

“They (China) are not going to be buying for the foreseeable future, with tariffs going up this week,” Houghton said.

Cash hog prices in the Iowa and southern Minnesota market fell $0.59 on Friday, although the pork cut-out rose by $1.36, the USDA said. (Reporting by Julie Ingwersen Editing by Tom Brown)

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