January 11, 2018 / 11:41 PM / a year ago

LIVESTOCK-Fund sell-off, NAFTA concerns extend CME hog losses

    By Theopolis Waters
    CHICAGO, Jan 11 (Reuters) - Chicago Mercantile Exchange lean
hogs        closed lower for a second straight day on Thursday,
pressured by fund liquidation and jitters about NAFTA talks,
said traders.
    On Wednesday, Mexico said it would withdraw from the North
American Free Trade Agreement (NAFTA) if the United States exits
trade talks with Canada.             
    Mexico is the leading destination for U.S. pork with Canada
ranked No.4, according to industry data.
    "The funds straight out liquidated the February contract.
And I'm not hearing anything negative except concerns about the
NAFTA issue," said Tom Cawthorne, director of commercial
agriculture with Hehmeyer Trading + Investments.
    Packers competed for supplies to round out the first week of
slaughters since the Christmas and New Year's holidays, said
traders and analysts.         
    Cash prices face challenges with some plants closing for
Monday's Martin Luther King Jr. holiday. A few processors may
pay less for supplies after the recent run up hog prices shrunk
their margins.        
    On Thursday, the U.S. Department of Agriculture's export
sales report showed U.S. pork exports for the week ended Jan. 4
at 12,500 tonnes in the current marketing year. Outstanding
sales from Dec. 31 totaled 84,700 tonnes.    
    February         hogs settled down 1.550 cents per pound at
70.975 cents. April         ended 1.950 cents lower at 73.825
    Short-covering and bargain buying pared some of CME live
cattle futures recent losses, said traders.
    They said cold weather and snow in the U.S. Plains
encouraged futures buyers. Frigid weather slows livestock weight
gains while snow and ice could make it hard to transport animals
to market.
    February         live cattle finished up 0.200 cent per
pound at 117.075 cents. April         ended up 0.200 cent lower
at 118.875 cents.
    Investors look forward to next week's slaughter-ready, or
cash, cattle trade. 
    Since late last week, packers paid $118 to $120 per cwt for
cash cattle in the U.S. Plains that a week earlier brought $123.
    Bullish traders believe much-improved packer margins might
encourage packers to pay more for supplies next week.        
    Market bears look for increased supplies and weaker
wholesale beef values to pressure cash prices.           
    USDA's export sales report put U.S. beef exports for the
latest week at 14,600 tonnes. Outstanding sales at the end of
2017 totaled 38,200 tonnes.
    Sell stops and the prospect of increased supplies ahead
weighed on CME feeder cattle contracts.
    January         feeder cattle closed 0.550 cent per pound
lower at 143.825 cents.

 (Reporting by Theopolis Waters; Editing by Lisa Shumaker)
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