CHICAGO, June 6 (Reuters) - A rally in corn prices sent feeder cattle futures sliding on the Chicago Mercantile Exchange (CME) on Thursday, while deferred live cattle futures inched upward earlier in the day on signs of short-covering, traders said.
Corn futures were choppy early, as weather forecasts across the U.S. Midwest continued to show a window for farmers to plant crops.
But corn recovered by the end of the session, thanks to spillover support in the wheat market and uncertainty over how much of the 2019 corn crop will not get planted.
“It’s almost a knee-jerk, reflective action now: When corn goes higher, and the market expects corn prices to go even higher and higher, the price of feeder cattle falls,” said Dan Norcini, an independent livestock trader based in Idaho.
For live cattle futures, traders said there was a sense in the market that a bottom has been set for the August and October contracts, which prompted some short covering.
And with weather warming up across much of the United States, bullish support remained on hopes for an increase in demand for meat as the grilling season takes off, traders said.
“The demand should set it, emphasis on ‘should,’” said Jack Scoville, analyst with the Price Group.
Also, live cattle futures are trading at a discount to live cattle prices in the cash market, prompting some funds to cover short positions, Norcini said.
“As deeply oversold as they were, traders are beginning to wonder how much more bad news there could possibly be coming,” Norcini said, citing weather and trade tensions between Washington and top U.S. export markets.
Lean hog futures were mixed, due in part to reports of cut-out prices in the pork market fluctuating, traders said.
The U.S. Department of Agriculture reported U.S. pork export sales were in line with expectations, particularly exports to Asia. Still, traders said they were growing concerned about whether there will be consistent demand in the domestic market too.
August feeder cattle finished Thursday down 0.175 cents at 139.275 cents per pound and September feeders settled down 0.1 cents to 139.6 cents.
June live cattle settled down 0.25 cent to 107.6 cents per pound, and most actively traded August closed up 0.125 cent to 104.8 cents.
CME June lean hogs closed down 0.475 cents at 79.375 cents per pound, while most actively traded July hogs ended up 0.075 cents at 86.35 cents. (Reporting by P.J. Huffstutter Editing by Susan Thomas and David Gregorio)