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Cattle and Hog Futures Prices Decline Amid Economic Weakness

Strategic Insights

— 1 min read

The Chicago Mercantile Exchange (CME) live cattle and feeder cattle futures prices settled lower on Wednesday, following signs of continued weakness in the economy, as crude oil and the Dow Jones Industrial Average fell. Lean hogs were sharply lower, while pork bellies closed higher in the front months but lower in the deferreds. Traders exited the market due to fears of a weakening economy and doubts about beef markets sustaining current levels without production cuts and resulting weaker cattle demand. Speculative traders also exited the market, and many brokers and analysts attributed the price decline to a combination of fundamental pressure and broken chart support levels.

Key Takeaways:

  • Live cattle futures prices settled lower, with August live cattle down 85 points at 83.35 cents a pound and October off 87 points at 88.32 cents.
  • Lean hog futures fell sharply, with July hitting a one-week low before a modest rally off the lows late in the session.
  • Pork bellies traded higher throughout the session, with July and August summer contracts hitting 1 1/2-week highs, but prices were pulled off their highs due to mild profit-taking.
  • Concerns about producers not trimming their breeding herds enough and resulting cash market weakness contributed to the selling in the deferred contracts.
  • Analysts and brokers cited worries about slow pork demand, weaker wholesale prices, and stalled cash markets as reasons for the decline.
  • Some traders were disappointed by the slow pork demand and turned into sellers, contributing to the losses in the spot month.

Statistics:

  • August live cattle settled down 85 points at 83.35 cents a pound.
  • October live cattle was off 87 points at 88.32 cents.
  • July lean hog futures lost 177 points, or nearly 3%, and closed at 58.92 cents a pound.
  • August pork bellies gained 47 points to close at 58.00 cents.
  • July pork bellies were up 70 points at 57.90 cents.

Sources:

  • Dow Jones Commodities News via Comtex, "Cattle and Hog Futures Decline Amid Economic Weakness"
  • Comtex SmarTrend Alert, "UPTREND on 12-09-2008 for CME @ $227.04"
  • Dow Jones Newswires, "Cattle and Hog Futures Decline Amid Economic Weakness"

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