Chicago | Reuters — Chicago Mercantile Exchange live cattle futures Tuesday settled mostly weaker on profit-taking and the morning’s soft wholesale beef prices, traders said.
The reversal of a trading strategy known as bear spreads implemented on Monday propped up the June contract and further pressured August futures.
June closed up 0.15 cent per pound to 153.3 cents, August ended down 0.15 cent to 152 cents and October closed 0.225 cent lower at 153.625 cents (all figures US$).
Tuesday morning’s choice wholesale beef price shed 19 cents per hundredweight (cwt) from Monday, to $254.09. Select cuts fell $1.61, to $243.01, the U.S. Department of Agriculture said.
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CME live cattle contracts’ price value to last week’s prices for market-ready (cash) cattle mitigated market losses.
Last week, cash cattle in the U.S. Plains moved at mostly $160/cwt, compared to $159-$161 the prior week, feedlot sources said.
Dwindling packer margins, tepid wholesale beef demand and packers drawing from supplies contracted against the futures market could pressure cash prices, traders and analysts said.
Tuesday’s beef packer margins were a negative $24.30 per head, compared with a negative $17.25 on Monday, according to HedgersEdge.com.
But the number of cattle available for sale unexpectedly declined, which might embolden some feedlots to request more money for supplies, the traders and analysts said.
CME feeder cattle were pressured by profit-taking, strong corn futures and live cattle market weakness.
August ended 0.225 cent/lb. lower at 223.325 cents.
Hogs sag with cash prices
CME lean hogs posted losses after investors took profits following softer cash values, traders said.
June closed down 0.175 cent/lb. to 84.475 cents, and July 0.55 cent lower at 83.8 cents.
USDA quoted Tuesday morning’s average cash hog price in Iowa/Minnesota at $79.63/cwt, $1.31 lower than on Monday.
Some packers lowered cash bids after buying all the hogs they need for this week, a trader said.
Market participants monitored the pork cutout price for signs that grocers may be snug on inventories heading into Father’s Day.
The government reported the morning’s wholesale pork price, or cutout, at $87.33/cwt, down four cents from Monday.
A few traders sold the June contract ahead of its expiration on June 12.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.
