By Benjamin Parkin 
 

Cattle and hog futures probed new multimonth lows on Tuesday.

Both markets have tumbled in recent sessions on everything from domestic oversupply of livestock to concerns that trade tensions will disrupt global demand for U.S. meat.

Those headwinds prompted hedge funds and other large speculative traders to unwind their bets that prices for cattle and hogs would rise, analysts said. The Commodity Futures Trading Commission reported last week that money managers had cut their net long positions in futures and options for both markets, a trend that observers say has continued into this week.

"The futures market continues to break down as managed money funds exit long positions," Troy Vetterkind, of Vetterkind Cattle Brokerage, said of the cattle market Tuesday morning.

"It would still appear as any near-term rallies are going to be met with heavy selling in anticipation of larger fed cattle supplies in the coming weeks."

The prospect of a looming boost in available slaughter-ready supplies has weighed down the cattle market, pushing prices to a two-month low.

April-dated live cattle contracts fell 0.5% to $1.19575 a pound at the Chicago Mercantile Exchange. Cattle traders also reacted to expectations that cash prices for physical cattle would fall this week.

Market observers said that meatpackers were bidding $125 and $126 per 100 pounds for slaughter-ready cattle in important producing states like Texas and Kansas, with some early sales booked around at those prices. That would be below last week's national average of $128 and regional average of $127. Hog futures were mostly lower.

The front-month lean-hog contract for April rose 0.2% to 63.25 cents a pound, inching off nearly a four-month low, while futures for later months fell. The cash market for hogs has slid for eight consecutive sessions, to a low of $56.41 per 100 pounds on Monday, and was expected to fall further on Tuesday.

Futures traders were betting that prospects for a near-term bounce were limited. Trade tensions, meanwhile, loomed over both cattle and hog markets. Market participants were betting that the much-touted prospect of a trade war with China and others could hurt meat exporters who need to increase their share of the global market in order to offset growing domestic supplies.

 

Write to Benjamin Parkin at benjamin.parkin@wsj.com

 

(END) Dow Jones Newswires

March 20, 2018 15:13 ET (19:13 GMT)

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