At the Chicago Mercantile Exchange (CME) on Thursday, June 6, rising corn prices led to a drop in futures for feeder livestock, while deferred livestock futures jumped early in the day amid signs of short coverage.
Corn futures were unstable early as weather forecasts in the Midwestern United States continued to show farmers a “window” for sowing. Secondary support in the wheat market and the uncertainty about how much corn crop will not be planted in 2019 restored the price of corn by the end of the session.
Dan Norcini, an independent trader from Idaho, described the phenomenon as “an almost reflexive, reflexive action: when corn rises higher and the market expects corn prices to rise higher and higher, the price of cattle feed falls.”
As for livestock futures, according to traders, the market got the feeling that the bottom was set for the August and October contracts, which caused some short coverage.
Livestock futures are traded at a discount to livestock prices in the cash market, which prompts some funds to cover short positions. Lean pork futures were mixed, due in part to reports of price fluctuations in the pork market.
The August cattle feeder ended Thursday with 139.275 cents per pound, while September feeders fell 0.1 cents to 139.6 cents. In June, livestock fell 0.25 cents to 107.6 cents per pound, while August, the most actively trading, closed at 104.8 cents.
CME pig indices fell 0.475 cents in June to 79.375 cents a pound, while the most actively traded pigs in July rose 0.075 cents to 86.35 cents.
