Chicago | Reuters — Thinly traded Chicago Mercantile Exchange feeder cattle futures settled down their three cents per pound daily price limit for a fifth straight day on Wednesday, led by the recent plunge in cash feeder cattle prices, traders said.
January and March closed at 216.6 cents and 212.25 cents, respectively (all figures US$).
Prior to late last month, feedyards actively bought young calves, or cash feeder cattle, which have been in short supply after years of drought shrunk the U.S. herd to a 63-year low.
But slumping returns for slaughter-ready cattle, along with expensive calves and higher-priced corn, made it less profitable for feedlots to bring in calves, traders and analysts said.
The CME may not expand feeder cattle limits unless it causes prolonged limit-down moves in the more actively traded live cattle market, they said.
Steep live cattle fall
CME live cattle closed down sharply following lower-than-expected preliminary returns for market-ready or cash cattle, traders said.
December closed 2.55 cents per pound lower at 156.425 cents, and February ended down 2.925 cents at 155.825 cents.
Earlier on Wednesday, a few cash cattle in Kansas moved at $156 to $157 per hundredweight (cwt), down from $162 to $164 in the U.S. Plains last week.
Packers cut kills, which should help stabilize their falling margins and lift wholesale beef prices.
On Wednesday, packers processed 101,000 cattle, down 11,000 from last week, according to U.S. Department of Agriculture data.
The afternoon’s choice wholesale beef price slipped 47 cents/cwt from Tuesday to $242.41. Select tumbled $3.12 to $231.13, the USDA said.
Hogs finish lower
CME hogs sank to their lowest since March 25, 2013, pressured by the drop in cash hog and wholesale pork prices, traders said.
February closed down 1.2 cents/lb. at 80.475 cents, and April dropped 1.525 cents to 81.9 cents.
USDA showed Wednesday afternoon’s average price of hogs in the Iowa/Minnesota market at $77.64/cwt, $3.16 lower than on Tuesday.
Separate government data put the afternoon’s wholesale pork price at $87.24, down $1.74/cwt from Tuesday, with all categories lower except pork bellies.
Packers are sorting through ample supplies given year-end holiday plant closures and producers marketing their animals ahead of time to beat lower prices, an analyst said.
Mild weather and newly harvested corn have delayed the seasonal slowdown in hog weights while increasing pork tonnage, he said.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.