Chicago | Reuters — Chicago Mercantile Exchange live cattle futures posted significant losses on Thursday for a second straight session, with nearby contracts posting new lows, in response to weaker cash prices, traders said.
Spot December closed 3.4 cents lower, at 125.7 cents/lb., and made a new low of 124.6 cents. February closed 2.175 cents lower, at 129.45 cents/lb., after marking a fresh low of 127.325 cents.
So far this week, the bulk of market-ready (cash) cattle in the U.S. Plains moved at $124 to $126/cwt, compared to mostly $126 to $127 last week, said feedlot sources.
Unprofitable packer margins and more animals for sale this week weighed on cash prices, said traders.
David Hales, author of the Hales Cattle Letter, said traders came to the realization that some packers will only process animals three to four days each week over the Christmas and New Years holiday.
“Next week could be the last week any packers buy cattle for the balance of year,” he added.
Market participants are eyeing wholesale beef demand that tends to pick up seasonally as consumers shop for steaks and roasts.
Thursday morning’s wholesale choice beef price climbed $1.38/cwt from Wednesday, to $205.46. Select cuts rose $1.01, to $193.26, based on U.S. Department of Agriculture data.
Higher corn prices and lower live cattle futures pressed CME feeder cattle contracts to new lows. January ended 0.975 cent lower at 159.750 cents/lb., and marked a new low at 156.775 cents.
Hog futures down, but off lows
CME lean hogs’ premiums to the exchange’s hog index for Dec. 1 at 55.81 and the morning’s soft cash prices pressured hog contracts, traders said.
Spot December finished one cent lower at 58.35 cents/lb. and February closed down 0.325 cent, to 58.825 cents.
USDA data showed Thursday morning’s average cash hog price in Iowa/Minnesota had fallen 69 cents/cwt from Wednesday to $52.50.
Packer inventories are almost full for this week, including an estimated 220,000-plus head Saturday kill, traders and analysts said.
Deferred contracts eased from morning lows on short-covering and the prospect that farmers might raise fewer hogs and feed them to lighter weight if corn prices continue to climb, said analysts and traders.
They said some investors purchased back months and simultaneously sold December futures ahead of its expiration on Dec. 14.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.