Chicago Mercantile Exchange live cattle futures finished lower on Monday on expectations that wholesale beef prices will soon set a seasonal high, traders and analysts said.
They said prospects for weaker wholesale beef prices and more cattle available for sale dampened optimism for higher cash cattle prices.
CME June and August live cattle drifted below their respective 20-day moving averages of 121.54 and 122.10 cents, which stirred fund selling (all figures US$).
June closed at 121.3 cents, 0.525 cents per pound lower. August ended 0.575 cents lower at 121.4 cents.
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Subsequent live cattle futures’ losses wiped out initial gains, led by June’s discount to last week’s cash cattle returns.
Cash cattle in Texas and Kansas sold at $128 to $129 per hundredweight (cwt), steady to $1 higher than the previous week, feedlot sources said. Live-basis cattle in Nebraska traded at $130 to $131, steady to up $3, they said.
All-time high wholesale beef prices last Friday contributed to early-Monday futures advances, a trader said. But grocers may resist buying beef at current levels which could weigh on cash cattle prices this week, he said.
The wholesale price of choice beef, or cutout, Monday morning fell $1.26/cwt to $200.42. Select cuts dropped 72 cents to $189.41, according to the U.S. Department of Agriculture.
Sharply lower Chicago Board of Trade corn prompted deep-deferred month CME livestock futures selling. Less-expensive corn could prompt cattle and hog producers to feed more animals and could result in heavier weights.
CME live cattle losses pressured feeder cattle futures.
May feeder cattle closed at 138.4 cents, down 0.375 cent/lb. And August settled down 0.05 cent to 147.45 cents.
Hogs sag with margins
CME hogs slid in anticipation of packers cutting cash hog bids and lowering slaughter rates to recoup lost margins, analysts and traders said.
“Front month weakness is tied to poor profit margins,” said independent livestock futures trader Dan Norcini, noting that some are expecting a seasonally weak trend in hog prices that typically begins in mid-May after retail buying for the U.S. Memorial Day holiday ends.
CME June hogs settled down 0.85 cent at 91.325 cents/lb. and July closed at 91.25 cents, 1.05 cents lower.
U.S. pork packer margins on Monday were estimated at a negative $7.90 per head versus a negative $3.95 on Friday and a positive $7.25 a week ago, according to HedgersEdge.com.
Hog prices in the most-watched direct Midwest markets were unavailable Monday morning.
The government estimated Monday’s slaughter at 408,000 head, down 7,000 from last week and 5,000 less than a year ago for the same period.
USDA’s Monday morning mandatory wholesale pork price, calculated on a plant-delivered basis, was $87.65/cwt. That was down 19 cents from Tuesday.
— Theopolis Waters reports for Reuters from Chicago.
