Livestock – U.S. cattle futures wilt with beef demand

Chicago Mercantile Exchange live cattle futures fell on Wednesday as wholesale beef prices slumped amid scorching heat in parts of the country, traders and analysts said.

“Conditions like these don’t typically encourage heavy high protein meals which will likely produce negative impact on animal protein consumption,” Hales Trading Co President David Hales said.

The U.S. Department of Agriculture Wednesday morning reported the wholesale price of choice beef at $189.43 per hundredweight (cwt). The price dropped $1.04 from Tuesday to under $190 for the first time since early April.

Cash cattle price uneasiness prompted more futures selling. Losses forced CME live cattle nearby contracts below key technical levels, which touched off sell stops and fund liquidation.

August live cattle finished at 121.300 cents, down
0.825 cent per lb and below the 40-day moving average of
121.790 cents.

October closed at 125.250 cents, or 1.150 cents lower. It settled beneath the 100-day and 20-day moving average convergence of 125.697 cents.

Profitable margins may prompt packers to spend at least steady money for cattle. And hot, humid conditions slow animal weight gains resulting in fewer available cattle for processors.

But packers are less likely to actively buy cattle given lackluster beef demand.

No cash cattle bids or asking prices were reported by feedlot sources. Cash-basis cattle last week moved at $119 to $120 per cwt.

Investors await USDA’s monthly cattle-on-feed report on Friday.

Analysts expect the data to show cattle placements in June dropped as ample grazing pastures kept animals out of feedyards longer.

Feeder cattle futures closed in sympathy with the lower CME live cattle market.

August CME feeder cattle closed at 150.975 cents, down 1.575 cents per lb and September at 153.950 cents, or 1.325 cents lower.


Hog futures posted modest losses pressured by lower cash hog prices, said traders and analysts.

Government data showed the average hog price on Wednesday morning in the eastern Midwest hog market at $93.45 per hundredweight (cwt), down 42 cents from Tuesday.

Some packers cut cash hog bids and curbed slaughters to improve their margins and offset tight supplies tied to warmer weather. Industry sources estimated Saturday’s hog slaughter at less than 2,000 head.

“Hog farmers in the western Midwest are sending hogs to market early in the morning or during the evening to avoid losing them to heat stress on trucks,” a trader said.

HedgersEdge calculated pork packer margins on Wednesday at a positive $1.15 per head, compared with a positive $1.45 on Tuesday and a positive $3.15 a week ago.

Fund buying and futures’ sizable discount to CME’s hog index at 102.19 cents minimized losses.

August closed 0.500 cent lower at 95.800 cents and October at 85.275 cents or down 0.075 cent.

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