U.S. livestock: Cash price drop rattles CME live cattle

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Thursday fell for a fourth straight day, pressured by lower prices for market-ready or cash cattle, traders said.

Cash cattle in the U.S. Plains sold at $155 to $156 per hundredweight (cwt), $2 to $3 lower than last week’s record highs, said feedlot sources (all figures US$).

Dwindling packer margins, more cattle available for sale and anticipation of a delayed seasonal bump in supplies dragged down cash prices.

Investors worried that wholesale beef prices might top out soon as temperatures rise in parts of the country, slowing down demand for heavier meals.

Traders are well aware of the overall tight cattle and hog supply situation, with the unknown being sustained meat demand, said independent livestock futures trader Dan Norcini.

Thursday morning’s wholesale price for choice beef marked a record high of $251.43/cwt, surpassing Wednesday’s top. Select beef hit $242.96, eclipsing Wednesday’s record, according to U.S. Department of Agriculture data.

Fund liquidation and sell stops hastened futures’ losses.

Funds trading in CME’s livestock markets at times shifted August long positions further back in a procedure known as the “roll” by followers of the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).

Thursday was the third of five days for the S+PGSCI roll process.

Investors on Friday are expected to even up positions before the weekend, which could include short-covering, a trader said.

August live cattle finished 2.65 cents/lb. lower at 148.15 cents, and October down 2.825 cents to 150.725 cents.

CME feeder cattle closed down the maximum three-cent daily price limit on fund selling, live cattle futures losses and sell stop.

August and September both closed three cents/lb. lower at 210.6 and 212.2 cents, respectively.

Cash, funds undercut hog futures

CME hog futures finished lower after unprofitable margins caused packers to reduce bids for slaughter-ready animals, traders said.

USDA data showed the afternoon’s average hog price in the Iowa/Minnesota market fell $2.40/cwt from Wednesday to $129.85, USDA said.

Pork packer margins for Thursday were at negative $1.05 per head, compared with a negative 55 cents on Wednesday and a positive $1.50 a week ago, as calculated by industry analytics firm HedgersEdge.com.

Funds sold August and October futures after both contracts drifted below key moving average support levels.

Speculators liquidated deferred-month long positions as corn prices edged lower. Less expensive feed may encourage producers to nourish hogs to heavier weights to help offset production losses caused by a virus that has killed millions of piglets.

July hogs, which will expire on July 15, closed 0.5 cent/lb. lower at 132.8. August ended down 1.65 cents to 127.95 cents, and below the 40-day moving average of 128.53 cents.

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

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