LIVESTOCK-Futures ease as trade sidelined amid U.S. govt shutdown

Tue Oct 1, 2013 2:34pm EDT

* Government furloughs keep investors at bay
    * Lack of information worrisome for industry
    * Hogs have added weight from pig inventory report
    * Feeder cattle buck trend as corn prices slide

    By Sam Nelson
    CHICAGO, Oct 1 (Reuters) - U.S. livestock futures fell on
Tuesday as investors were reluctant to trade after the U.S.
government shut down many reporting agencies due to a lack of
funding and a because of a logjam over several other issues
including immigration reform, the federal debt and a new farm
bill.
    Agencies viewed as essential will remain open such as the
federal meat inspection service, to ensure a safe food supply.
    The partial shutdown of the government began to delay the
release of data which left policymakers and investors in a fog.
 
    CME Group said a prolonged shutdown could affect
settlement prices for cash-settled dairy, lean hogs, live cattle
and feeder cattle contracts. 
    "It is a big mess and I think that is a big reason we're
lower, at least on cattle. People won't want to trade while this
is going on," said Dennis Smith, a livestock broker for Archer
Financial.
    "It makes my private contacts with Urner Barry more
important, I will have to rely on them almost solely for market
information now," Smith said.
    Urner Barry is a business publisher specializing in
reporting market news and quotations from the poultry, egg,
meat, seafood and related segments of the food industry.
    Live cattle futures closed lower despite higher cash cattle
markets late last week. And futures eased despite a firm
wholesale cash beef market late on Monday, the last such report
that was issued before the government shuttered the doors of the
U.S. Department of Agriculture (USDA) agency responsible for
reporting the beef market trends. 
    "The whole government shutdown thing has the market nervous
and that is eliminating risk taking. Anytime you have this kind
of uncertainty, no one is willing to take a risk," said Sterling
Smith, futures specialist for Citigroup.
    Chicago Mercantile Exchange (CME) October live cattle
futures closed down 0.600 cents per pound at 127.250 
cents per pound and December was down 0.075 at 131.900.
    Feeder cattle futures bucked the trend and ended firm on
bargain buying as Chicago Board of Trade corn futures fell to a
three-year low. The falling corn prices and related drop
in feed costs led to increased demand for young cattle to place
in the nation's vast network of feedlots.
    CME October feeder cattle were up 0.300 cent per lb
at 164.400 cents per lb and November ended up 0.850 at
166.050.
    Traders and analysts said hog futures had started to falter
even before the government shutdown but the lack of available
information to trade likely led to further pressure on the hog
futures market.
    "Hogs also are down due to the government shutdown but also
based on the USDA saying there are more hogs out there than
anyone expected," Smith said.
    Friday's U.S. Department of Agriculture report showed the
U.S. hog herd unexpectedly held steady from the June-August
quarter versus a year earlier despite the spread of the Porcine
Epidemic Diarrhea virus (PEDv), which is fatal to baby pigs.
 
    "There will be more hogs coming to market in October and
November than anyone thought," Smith said.
    CME October lean hogs were down 1.050 cents per lb
at 90.925 and December was down 0.725 at 85.900.
    Cash hogs traded steady to $1 per hundredweight (cwt) lower
across the U.S. Midwest, dealers said.
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