U.S. live cattle futures slump as funds sell

Chicago Mercantile Exchange live cattle futures finished lower on Thursday as fund liquidation erased early-session cash-infused gains, traders said.

Wednesday’s CME live cattle advances, driven by higher cash cattle prices and the firm beef cutout, carried over into Thursday morning’s trade.

However, traders took profits in anticipation of cash cattle prices peaking soon as packers focus on their fading operating margins.

Fund selling occurred after December futures drifted below the 10-day and 20-day moving averages of 132.45 and 131.92, which also tripped sell stops.

Live cattle October closed down 0.15 cent per pound, to 129.15 cents, while December finished 1.475 cents lower at 131.675 cents (all figures US$).

So far, cash cattle in the U.S. Plains mostly traded at $129 to $130 per hundredweight (cwt), up $1 to $2 from last week, feedlot sources said. This week’s cash returns challenged the $130 all-time high for the week ended March 2, 2012, feedlot sources said.

Thursday afternoon’s wholesale choice beef price, or cutout, was at $195.14/cwt, up 26 cents from Wednesday. Select cuts gained 57 cents to $181.42, according to analytical market-research firm Urner Barry.

The U.S. Department of Agriculture resumed the release of some of its livestock price data after lawmakers in Washington late on Wednesday struck a deal to reopen the federal government and increase the debt limit.

USDA on Thursday afternoon showed the wholesale choice beef price, or cutout, at $196.03/cwt with select cuts at $181.72. There were no price comparisons due to the lapse in information during the government shutdown.

“I’m surprised that the difference between Urner Barry and USDA is not that far apart given the government’s meat price surveys tend to cover a broader range of items,” a trader said.

USDA on Thursday said it will delay Friday’s monthly cattle on feed report until Oct. 31.

Most analysts polled by Reuters for the cattle report said feedlot placements last month likely rose 1.6 per cent from a year ago as corn costs declined.

Deferred cattle months felt pressure from concern that consumers might switch to cheaper pork and chicken if packers raised wholesale beef costs to offset near record-high cash cattle prices.

The slide in CME live cattle and technical selling undercut feeder cattle futures.

October feeder cattle ended down 0.15 cent/lb. to 165.85 cents. November settled at 166.9 cents, 0.825 cent lower.

Hogs slip on profit-taking

CME hogs eased from new contract highs, weakened by profit taking in anticipation of lower cash hog prices as supplies increase seasonally, traders and analysts said.

They said retailers are buying pork sparingly after having all they need to accommodate demand during the second half of October National Pork Month.

And packers may cutback slaughter rates to improve their waning margins.

December hogs closed 0.35 cent/lb. lower at 88.45 cents after posting a new contract high of 89.9 cents in electronic trading.

February finished at 90.525 cents, down 0.125 cents. It earlier spiked to a new contract high of 91.525 cents.

Urner Barry’s Thursday wholesale pork price, or cutout, was at $91.37/cwt, up 20 cents from Wednesday.

USDA data showed its wholesale pork price, or cutout, Thursday afternoon at $95.88/cwt, with no price comparison.

HedgersEdge.com estimated U.S. pork packer margins on Thursday at a positive 25 cents per head, compared with a positive $7 on Wednesday and a positive $6.30 a week ago.

The government Thursday afternoon showed the average price of hogs in the most-watched Iowa/Minnesota direct market at $91.37/cwt with no previous price comparison available.

USDA’s hog price is up slightly from CME’s final average weighed average settlement of 90.62 cents for the October 2013 contract that expired on Monday.

“Having USDA’s price information gives us something better to base our decisions on,” R.J. O’Brien hog futures trader Tom Cawthorne said.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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