Chicago | Reuters — Chicago Mercantile Exchange live cattle futures ended moderately lower on Thursday after a choppy session in which anticipation of lower cash prices overtook sporadic short-covering, traders said.
December closed 0.4 cent per pound lower at 166.45 cents, and February down 0.15 cents at 166.975 cents.
Packers curtailed production to stabilize their falling margins and lift wholesale beef prices, which may pressure market-ready (cash) prices for this week.
Processors in Kansas hiked cash bids from $166 to as much as $168 per hundredweight (cwt) versus up to $175 asking prices there and elsewhere in the U.S. Plains, feedlot sources said. Last week, cash cattle moved at mostly $172 to $173.
Thursday morning’s choice wholesale beef price dropped $1.46/cwt from Wednesday to $254.95. Select fell 81 cents to $240.97, the U.S. Department of Agriculture said.
Beef packer margins for Thursday were a negative $120.55 per head, compared with a negative $120.70 on Wednesday, according to Colorado-based analytics firm HedgersEdge.com.
Short-covering and futures’ discounts to last week cash prices may land some contracts in positive territory on Friday, traders and analysts said.
CME nearby feeder cattle contracts drew support from short-covering and futures’ discounts to the exchange’s feeder cattle index for Dec. 2 at 244.99 cents.
Higher corn prices dropped deferred feeder cattle contracts.
January ended 1.125 cents/lb. higher at 235.95 cents, and March rose 0.15 cent to 232.05 cents. April and May closed down 0.3 cent to 232.55 cents and 232.6 cents, respectively.
Weak hogs settlement
CME lean hogs declined for a fifth straight session in anticipation of weaker prices for slaughter-ready (cash) livestock, traders said.
December closed 0.425 cent/lb. lower at 87.625 cents, and February fell 0.25 cent to 86.625 cents.
Thursday morning’s average cash hog price in the western Midwest region slumped $1.80/cwt to $84.07.
Packers lowered their bids for cash hogs after topping off inventories for this week’s production while trying to conserve their thinner margins.
HedgersEdge.com calculated Thursday’s pork packer margins at a positive $5.45 per head, compared with a positive $4.50 on Wednesday.
The cash situation and uncertain pork demand mostly affected the February contract, which will be the new lead month after December futures expire next Friday (Dec. 12), a trader said.
Nearby trading months drifted below Wednesday’s lows, which triggered sell stops, he said.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.