Cattle, hogs down as Middle East conflict sparks risk-off selling - CME

The conflict sent crude oil prices soaring
calendar icon 10 October 2023
clock icon 2 minute read

Chicago Mercantile Exchange (CME) cattle futures retreated on Monday while lean hog futures fell for the first time in four sessions, pressured by risk-off selling as violence erupted in the Middle East over the weekend and riled global markets, reported Reuters.

The bloodiest fighting in years between the Palestinian Islamist group Hamas and Israel sent crude oil prices soaring. The energy rally sparked renewed concerns about consumer price inflation that has dented meat demand in the past.

"The funds are long cattle and feeders, and the hog market is fragile right now. This is a risk off trade with the outside markets reacting to the war in Israel," said Don Roose, president of US Commodities in West Des Moines, Iowa.

CME December live cattle fell 1.325 cents to settle at 185.350 cents per pound after hitting overhead technical resistance at its 50-day moving average. November feeder cattle shed 1.225 cents to end 249.650 cents per pound.

Poor beef packer margins and adequate supplies of market-ready animals also weighed on live cattle, although beef demand seasonally tends to rise in October into November.

The average beef packer margin on Friday was estimated at a negative $89.65 per head, down from a negative $64.50 a week earlier, according to livestock marketing advisory service

Worries about domestic pork demand and ample supplies of hogs hung over the lean hog market, along with news that major packer Smithfield is closing its Charlotte, North Carolina, pork processing plant and moving operations to its Tar Hill facility.

Actively traded December lean hogs fell 1.100 cents to settle at 72.475 cents per pound after hitting overhead technical chart resistance near its 20-day moving average during the session.

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