Chicago | Reuters — Live cattle futures on the Chicago Mercantile Exchange dipped on Wednesday, as easing post-holiday retail demand, combined with strong cash cattle prices, eats into processor profitability.
“This week specifically is when we transition to buying for a lower-demand period, post-holidays,” said Rich Nelson, chief strategist at Allendale Inc. “Packer margins are so stressed right now, from this drop in beef but still strong cash cattle.”
CME benchmark February live cattle eased 0.075 cents to 153.55 cents/lb., while the spot December contract inched up 0.375 cent to 151.925 cents/lb. (all figures US$).
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Most-active CME January feeder cattle lost 0.9 cents to 180.9 cents/lb.
Boxed beef prices gained after steep declines in the last week, with choice cuts adding $6.31, to $248.96 per hundredweight (cwt), while select cuts firmed 63 cents, to $219.77/cwt, the U.S. Department of Agriculture said.
Meanwhile, lean hogs eased, though seasonal losses were capped by optimism that lifted COVID-19 restrictions in China could mean more U.S. exports to the country.
“Seasonally, we should have just about one more week left of pressure. The issue for the hog market is, we’ve all been up and down based on wild exaggerations of Chinese buying expectations,” said Nelson.
CME February lean hogs fell 0.275 cents, to 86.65 cents/lb., while nearby December hogs inched up 0.1 cent, to 82.375 cents/lb.
The CME’s lean hog index, a two-day weighted average of cash hog prices, added 15 cents, to $82.94/cwt.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.
