US cattle falls on technical selling, demand fears

U.S. cattle futures fell to their lowest level in 3-1/2 months on Tuesday amid selling by commodity funds and a sharp increase in the dollar, which could dampen export demand.

Concerns over beef demand kept hanging over the market as the controversy over filler beef that critics call 'pink slime' claimed another victim. Ground beef processor AFA Foods filed for bankruptcy protection on Monday.

"Today there was technical action. Funds were dumping commodities," said Dan Norcini, an independent livestock trader.

Live cattle futures traded as low as 119.400 cents per lb on Tuesday, the lowest since Dec. 19, 2011.

Futures were weighed by declining prices for cattle in cash markets, with trading on Tuesday at $122 per cwt in Texas and Kansas -- down $2 to $3 from last week and more than 6 percent lower from a record high $130 early last month. Cash cattle traded at $124 to $125 per cwt last week.

The estimated choice-grade wholesale beef price was up 47 cents to $184.57 on Tuesday morning, according to U.S. Agriculture Department data, however load count was light at 58 loads. The uproar over "pink slime" kept weighing on the market.

"It has put a dent in demand. It is bullish for live cattle over the long-term, but short-term it is certainly negative," Norcini said.

April live cattle futures on the Chicago Mercantile Exchange fell 1.050 cent, or 0.87 percent, to settle at 119.800 cents per lb. June cattle fell 0.750 cent, or 0.64 percent, to 116.050 cents.

Rising corn prices pressured feeder cattle futures. CME April feeder cattle fell 0.275 cent, or 0.18 percent, to 149.250 cents per lb.

HOGS FOLLOW CATTLE LOWER
Lean hog futures were also pressured by technical selling in the livestock sector trimming gains from a Monday's rally.

"Hogs want to find a bottom, but they keep getting pulled lower by cattle," Norcini said.

Pork packer margins remain in the red at a negative $4.40 per head on Tuesday, but improved from losses a week ago at negative $10.15 per head.

Actively traded April hogs ended down 0.700 cents, or 0.83 percent, at 84.025 cents a lb and June hogs fell 0.525 cent, or 0.57 percent, to 91.650 cents.

(Reporting by Meredith Davis; Editing by David Gregorio)

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