U.S. livestock: CME live cattle drop as funds roll August positions

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures closed lower on Thursday following the roll by funds out of August into deferred months ahead of similar moves beginning on Friday, traders said.

Friday is the first of five days in which funds in CME’s live cattle and lean hog markets that track the Standard + Poor’s Goldman Sachs Commodity Index periodically sell, or “roll,” August long positions mainly into October.

August ended down one cent to 111.8 cents, and October closed 0.875 cent lower at 112.225 cents (all figures US$).

Slipping but still profitable packer margins and three days of firm wholesale beef values fueled optimism for steady-to-better prices for market-ready, or cash, cattle by week’s end.

However, futures’ two-day slide might limit possible cash advances.

The futures market could be a contributing factor to this week’s cash price outcome, said Linn Group analyst John Ginzel. “The tail is wagging the dog,” he added.

Cash bids in Texas and Kansas were at $119/cwt versus more than $124 asking prices, said feedlot sources. Last week, packers paid $120 to $122 for cattle.

The morning’s choice beef price was at $209.32/cwt, up 24 cents from Wednesday. Select cuts gained 10 cents to $197.03, the U.S. Department of Agriculture said.

Beef packer margins for Thursday, on average, were a positive $21.80 per head, down from a positive $24.85 on Wednesday and a positive $83.30 a week ago, as calculated by HedgersEdge.com.

Sell stops, fund liquidation and live cattle futures selling pressured CME feeder cattle contracts. August feeders closed 0.95 cent/lb. lower at 143.625 cents.

Weak hog market settlement

CME lean hogs ended lower on near-term cash price uncertainty and fund rolling of August long positions, said traders.

July, which will expire on July 15, ended 0.525 cent/lb. lower at 81.05 cents. Most actively traded August finished down 0.5 cent to 80.125 cents.

Midwest cash hog prices Thursday morning were steady with a weak undertone, according to regional hog dealers.

They said some packer inventories are full through next week, but others still need hogs for Saturday’s projected 100,000-head slaughter.

The morning’s higher wholesale pork values and futures’ discounts to CME’s hog index for July 5 at 83.24 cents minimized market losses.

Grocers restocked meat cases after Monday’s holiday, which also made less product available to retailers due to plant closures, said traders and analysts.

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

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