U.S. livestock: CME live cattle sag despite supportive fundamentals

Feeder cattle ends lower; lean hogs finish higher

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed lower on Thursday, dragged down by technical selling that offset higher cash and wholesale beef prices, traders said.

February live cattle closed 1.55 cents/lb. lower at 130.55 cents, and April had fallen 1.525 cents, to 131.5 cents (all figures US$).

“People were disappointed that cash prices were up $1 rather than $2/cwt higher, and they’re unsure when the cutout will finally top out,” a trader said.

So far, market-ready, or cash, cattle in the U.S. Plains mostly fetched $133-$134/cwt, up from $131-$133 last week, feedlot sources said.

Thursday’s afternoon’s wholesale beef price, or cutout, slipped five cents/cwt from Wednesday, to $235.16. Select cuts gained 35 cents, to $229.43, according to U.S. Department of Agriculture data.

Highly-profitable packer margins encouraged them to pay more for cattle, but processors bought sparingly which could result in more animals for sale next week, traders and analysts said.

They said grocers are resisting buying beef at current prices when competitively pork is readily available.

Funds sold the February live cattle and lean hog contracts, and at the same time bought deferred months, in association with the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).

Thursday was the last of five days of the process known as the S+PGSCI “roll.”

Thursday was also the final day when some index funds bought CME livestock futures as part of their annual rebalancing of commodity holdings.

Live cattle market liquidation pressured CME feeder cattle futures. January closed 1.975 cents/lb. lower at 158.8 cents.

Hog futures slip

Short-covering stirred by higher wholesale pork values sent CME lean hogs higher, traders said.

Spot February finished up 0.725 cent/lb., to 62.35 cents, and April ended 0.625 cent higher at 67.775.

The government reported the afternoon’s wholesale pork price at $72.14/cwt, $1.49 higher than on Wednesday, strengthened by the more than $3 hike in ham costs.

Weak cash prices, after some packers filled inventories for this week’s production, limited future’s advances.

Packers in Iowa/Minnesota on Thursday afternoon paid $52.60 for hogs, down 30 cents from Wednesday.

Theopolis Waters reports on livestock markets for Reuters from Chicago.