Chicago/Reuters — Chicago Mercantile Exchange live cattle on Wednesday pared Tuesday’s gains following lower trending wholesale beef prices, suggesting demand may have peaked in the near term, traders said.
Wednesday morning’s wholesale price for choice beef, or cutout, slipped 37 cents per hundredweight (cwt) from Tuesday to $250.16 per cwt. Select beef was down 26 cents to $243.20, according to the U.S. Department of Agriculture.
“There is a seasonal expectation for slowing demand. But, the mild summer weather in parts of the country would favor demand against the seasonal trend,” said Brock Associates analyst Doug Houghton.
The beef cutout’s pullback, more cattle for sale this week and anticipation of a delayed seasonal rise in supplies point to steady or lower prices for market-ready or cash cattle this week.
Front-month CME live cattle finished off lows of the day after packers in Kansas paid $155 per cwt for cattle, down $1 from last week, said feedlot sources. Bids elsewhere in the Plains were at $155 against $156 to $158 asking prices.
“Some people sold the futures market in the hole thinking cash would be down $2,” a trader said.
August live cattle finished 0.900 cent per lb lower at 147.675 cents, and October down 0.550 cent to 151.300 cents.
CME feeder cattle felt pressure from profit-taking, lower live cattle futures and firm corn prices.
“You had people with big profits on the long side of this market that has been significantly overbought for quite some time,” Houghton said.
Traders also cited steady to $4 per cwt lower prices for feeder cattle in local markets.
August closed down 1.700 cents per lb to 209.825 cents, and September 1.325 cents lower at 210.500.
HOG FUTURES SLIP ON CASH PRICES
CME hogs finished lower, weighed down by weaker prices for slaughter-ready or cash hogs, traders said.
Wednesday morning’s average hog price in the Iowa/Minnesota market fell $1.95 per cwt from Tuesday in thin volume to $130.17, USDA said.
Negative packer margins and heavier hogs, which are offseting tight supplies, pressured cash hog prices, traders and analysts said.
Some processors are buying supplies for next week, which means they might be snug on near-term inventories, a trader said.
Although strong wholesale pork prices are encouraging, they may be the result of reduced slaughter rates, said Houghton.
USDA’s data showed the morning’s wholesale pork price up $1.19 per cwt to $136.37.
From Monday to Wednesday, packers processed 1.155 million hogs, down 32,000 from last week and 53,000 less than a year ago, based on USDA data.