U.S. livestock: CME live cattle close weaker on profit taking

(CMEGroup.com)

Chicago | Reuters — Chicago Mercantile Exchange live cattle finished lower in choppy trading on Tuesday, pressured by profit-taking that outpaced initial buying led by bullish fundamentals, traders said.

December, which will expire on Wednesday, closed 0.625 cent per pound lower at 165.875 cents, and February was down 0.3 cent at 164.7 cents (all figures US$).

Investors expect packers to spend the same for cattle as last week, or possibly more, based on futures’ rally prior to Tuesday’s setback and strong wholesale beef demand.

Some processors need supplies after being caught short while buying for the first full slaughter week after the Christmas and New Year’s holidays.

Tuesday morning’s choice wholesale beef price rose $1.19 per hundredweight (cwt) from Monday to $246.86. Select was up seven cents at $236.58, according to the U.S. Department of Agriculture.

This week, market-ready or cash cattle bids in the U.S. Plains stood at $160 to $162/cwt versus asking prices of more than $166, said feedlot sources.

In a trading strategy known as bear spreading, traders sold CME live cattle nearby contacts and bought comparatively lower-priced deferred months.

Futures may be in for another up-and-down session on Wednesday as investors settle their accounts on the last trading day of 2014.

CME feeder cattle garnered support from buy-stops, lower corn prices and modest back-month live cattle market advances.

January closed up 0.875 cent/lb. at 218.325 cents, and March was 0.575 cent higher at 216.250 cents.

Hogs turn lower

CME hogs ended lower on tepid wholesale pork demand and mixed cash prices that erased Monday’s gains, traders said.

February closed down 0.625 cent/lb. at 81.175 cents, and April was 1.225 cents lower at 83.425 cents.

Tuesday morning’s average hog price in Iowa/Minnesota was up 25 cents/cwt from Monday at $74.90, but dropped 42 cents in the eastern Midwest to $72.76, USDA said.

Separate government data showed the morning’s wholesale pork price had slipped eight cents/cwt from Monday to $86.80.

Packers need fewer animals after systematically shutting down plants during the year-end holidays.

Grocers may wait to book a significant amount of product after they determine how much moved over the New Year’s holiday, an analyst said.

Futures were overvalued based on CME’s hog index for Dec. 26 at 78.73 cents, which discouraged buyers.

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

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