U.S. livestock: Cash price unease pressures CME live cattle

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Thursday slipped for a second straight day, amid investor caution while waiting for remaining cash cattle to change hands by Friday, said traders.

Short-covering and futures’ discounts to early-week cash returns provided downside market support, they said.

February live cattle closed down 0.25 cent/lb. to 116.525 cents, and April 0.1 cent lower at 113.25 cents (all figures US$).

The bulk of animals sold on Wednesday’s Fed Cattle Exchange brought $118.50-$119.25, compared with last week’s $117.50 average.

Slaughter-ready, or cash, cattle bids elsewhere in the U.S. Plains stood at $116/cwt against $122 asking prices, said feedlot sources. Last week, Plains’ cash cattle fetched $119-$120.50.

Cattle traders are weighing futures’ supportive discount to cash prices against bearish poor packer profits and readily available cattle, said Oak Investment Group president Joe Ocrant.

Furthermore, funds in CME’s live cattle market continue to hold large long positions, and although the beef cutout improved on Thursday, “it’s still not good,” said Ocrant.

Thursday morning’s average wholesale beef price, or cutout, jumped 93 cents/cwt to $189.27 from Wednesday. Select cuts rose 75 cents to $187.90, the U.S. Department of Agriculture said.

Thursday’s reduced USDA cattle and hog slaughter estimates may reflect packer cutbacks because of their poor margins and some plant workers who stayed home for the “Day Without Immigrants” protests, said traders and analysts.

Thursday’s average beef packer margins were at a negative $80.75 per head, down from negative $69.20 a week ago, as calculated by HedgersEdge.com.

Profit-taking and live cattle futures weakness undercut CME feeder cattle contracts.

March feeders closed 0.45 cent/lb. lower at 123.825 cents.

Lower hog futures

CME hogs stumbled on technical selling and profit-taking following the morning’s lower wholesale pork values, traders said.

April closed 0.95 cent/lb. lower at 69.825 cents, and May 0.825 cent lower at 74.7 cents.

USDA data on Thursday morning showed the average wholesale pork price dropped 88 cents/cwt to $84.60 from Wednesday, mostly led by $3.75 lower pork bellies.

Bacon slicers and other end-users are less likely to store more bellies at current prices, particulary with more fresh bellies becoming available in the coming months, a trader said.

Packers paid more for hogs amid tight near-term supplies and in preparation for a Saturday slaughter close to 200,000 head, said Midwest hog merchants.

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

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