he Chicago Mercantile Exchange (CME) saw divergent trends on Monday, with feeder cattle futures retreating after a strong rally and lean hog futures advancing on robust wholesale pork prices.
Feeder Cattle and Live Cattle Decline After Rally
Feeder cattle futures experienced a sharp profit-taking pullback after a ten-session rally pushed prices to five-month highs. Live cattle futures followed suit, declining alongside feeders.
Market analysts cited managed funds increasing their long positions in feeder and live cattle futures in recent weeks, fueled by tight cattle supplies and strong beef demand. This set the stage for profit-taking.
Mike Zuzolo, president of Global Commodity Analytics, explained, “The managed money added to their net longs in feeders and, to a lesser degree, in fats. It just opened the door for some long liquidation and profit-taking.”
Additionally, news of Tyson Foods closing another meat processing plant raised concerns among livestock traders about potential tightening in the packing industry. The closure of Tyson’s Emporia, Kansas, plant—which produces seasoned and marinated meats but does not slaughter livestock—is slated for February.
“This kind of news is price-negative for wholesale and producer prices but price-positive for the retail market. It’s not a slaughter plant, but it goes along with other Tyson plants that have closed,” Zuzolo noted.
- January feeder cattle: dropped 2.625 cents to 256.850 cents per pound.
- February live cattle: shed 0.700 cents to 188.625 cents per pound.
The declines followed a strong two-week rally that saw feeder cattle prices climb over 6%, partially driven by the U.S. halting cattle imports from Mexico after a New World screwworm case was reported in a cow.
Lean Hog Futures Rise on Wholesale Pork Strength
In contrast, CME lean hog futures advanced on Monday, bolstered by increasing wholesale pork prices.
- February lean hogs: jumped 1.625 cents to 86.325 cents per pound.
- Wholesale pork carcass cutout: rose $2.35 to $92.66 per cwt, led by a surge in ham prices.
The upward momentum in hog futures reflects the strength of the wholesale market, offering a positive signal for producers as pork demand remains solid.
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