U.S. livestock: CME live cattle close weak; hogs higher

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures closed down slightly on Friday after investors digested this week’s prices for market-ready or cash cattle, traders said.

October closed down 0.2 cent per pound to 165.05 cents, and December 0.25 cent lower at 165.05 cents (all figures US$).

Cash cattle this week sold steady with mostly $164 per hundredweight (cwt) last week, according to feedlot sources.

While fewer animals for sale underpinned cash cattle prices, unprofitable packer margins and lacklustre wholesale beef values kept a lid on cash returns.

Friday afternoon’s choice wholesale beef price gained 24 cents/cwt from Thursday to $249.16. Select slipped 14 cents to $234.78, the U.S. Department of Agriculture said.

Beef packer margins for Friday were a negative $71.05 per head, compared with a negative $54.90 on Thursday and a negative $40.05 a week earlier, according to Colorado-based analytics firm Hedgersedge.com.

“Seems to be a lot of unease about the seasonal beef demand outlook,” said Dan Vaught, economist with Doane Advisory Service. Bearish traders might be expecting ramped up retail ham and turkey business for the Thanksgiving holiday, he said.

Investors anxiously await next week’s cash cattle prices as packers weigh negative margins against a dwindling supply situation, traders and analysts said.

Most CME feeder cattle contracts settled down the maximum 3-cents per lb daily price limit in thin trading, pressured by live cattle weakness.

Traders cited the exchange’s feeder cattle index for Oct. 16 at 243.32 cents, compared to 243.81 cents for Oct. 15.

October, which will expire on Oct. 30, closed 1.75 cents/lb. lower at 238.45 cents. November and January ended at 234.15 and 228.125 cents, down three cents.

Hogs close higher

Pre-weekend short-covering and barging hunting after recent market losses lifted CME hogs futures, traders said.

December finished up 0.25 cent/lb. at 90.575 cents, and February rose 1.1 cents, to 87.55 cents.

Lower-trending cash hog and wholesale pork prices limited December buying and generated bear spreads. Those spreads consisted of traders who sold December and simultaneously bought back months.

The afternoon’s average hog price in Iowa/Minnesota was down $1.84/cwt from Thursday at $98.27, according to USDA.

Separate government data showed Friday afternoon’s wholesale pork price, or cutout, dropped $2.71/cwt from Thursday to $111.01, led by the $5.40 decline in pork belly costs.

Seasonally, more hogs are available which is putting pressure on cash prices and adding more tonnage to the wholesale sector, a trader said.

“Friday’s market rally may be more of a dead-cat bounce considering the fundamental picture remains somewhat bearish,” he said.

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

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