U.S. livestock: CME live cattle end lower after volatile day

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures ended lower on Friday after a choppy session, dragged down by profit-taking that trumped steady-to-higher prices for market-ready or cash cattle, traders said.

On Friday, cash cattle in Texas traded at $146 per hundredweight (cwt), up $1 from last week, feedlot sources said. Cash cattle in Kansas fetched $146, which was steady with a week ago.

Cash cattle in Nebraska sold from $147 to $150/cwt, compared to $146 to $148 last week, a feedlot source said.

Some processors needed cattle for next week and feedlots held out for more money while eyeing improved packer margins, traders said. But slack beef demand and expectations for seasonal increase in cattle numbers reversed the market’s early-session spike to new contract highs.

Friday afternoon’s wholesale choice beef price fell $1.96/cwt from Thursday to $228.38. Select cuts tumbled $3.51 to $217.47, based on U.S. Department of Agriculture data.

The industry typically slaughters more cattle in May and June, said Linn Group analyst John Ginzel. Also, packers slashed beef prices to move product due to the late start of the spring grilling season, he said.

CME live cattle may start Monday’s session mixed, given futures’ bullish discount to cash prices versus problematic beef sales, a trader said.

June live cattle closed 1.2 cents/lb. lower at 138.05 cents, after spiking to a new contract high of 139.95.

August finished 1.225 cents lower at 137.35. It marked a fresh contract high of 139.575 cents.

CME feeder cattle finished mixed after hitting an all-time high for a second day in a row.

Nearby feeder cattle futures slipped with lower CME live cattle, but back months drew support from lower corn prices.

May closed 0.45 cent/lb. lower at 183.5 cents, and August down, 0.15 cent to 190.325.

September closed up 0.125 cent to 191.1 cents, and October 0.35 higher at 191.325 cent.

More hog futures losses

CME hogs extended losses for a fourth day in a row as ample supplies curbed packer demand for slaughter-ready hogs, traders said.

The afternoon’s average hog price in the closely-watched Iowa/Minnesota market dropped 46 cents/cwt to $112.33, according to USDA.

Futures’ price premium to CME’s hog index, at 115.12 cents, sidelined potential buyers.

And, fund liquidation and sell stops ensued after the July contract slipped beneath the 10-day and 40-day moving average convergence level of 122.479 cents.

Recent CME hog market behaviour suggests some funds are reversing the previous trend of being long hog futures and short the cattle market, said Ginzel.

That possible shift is likely associated with lower cash hog prices and higher cash cattle returns, he said.

May hogs closed 0.15 cent/lb. lower at 117.225, and June down 0.575 cent at 122.225 cents.

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

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