U.S. livestock: CME live cattle, hogs end firm after choppy session

(CMEGroup.com)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Wednesday closed firm, supported by their discounts to last week’s prices for market-ready or cash cattle, traders said.

CME hogs also posted gains, helped by short-covering after brushing aside lower cash and wholesale prices, they said.

The live cattle market chopped around throughout the session as investors wait for this week’s cash cattle returns, that could draw pressure from ebbing beef cutout values.

Last week, cash cattle in the U.S. Plains traded at mostly US$162 to $164 per hundredweight (cwt).

Wednesday afternoon’s choice wholesale beef price, or cutout, dropped $1.30 per pound from Tuesday to $261.97 (all figures US$). Select beef sagged 98 cents to $255.77, the U.S. Department of Agriculture said.

Futures earlier drifted lower because the wholesale product market is struggling and packers will resist bidding up for cattle, said Linn Group analyst John Ginzel.

Packers cut slaughters to counter generally tight cattle supplies. They are also drawing from animals contracted against the futures market to avoid spending more for cattle.

From Monday to Wednesday, packers processed 340,000 head of cattle, down 20,000 from last year, according to USDA.

August live cattle closed up 0.1 cent/lb. to 158.55, above the 10-day moving average of 158.36 cents. October 0.3 cent higher at 155.95 cents, and above the 20-day moving average of 155.63 cents.

CME feeder cattle finished narrowly mixed, supported by their discounts to the exchanges feeder index at 124.56 cents, but pressured by higher corn prices.

August finished up 0.075 cent/lb. to 221.325. September closed unchanged at 220.725 cents. October ended down 0.075 cent to 219.975 cents.

Hogs find support

Short-covering and bargain hunting landed CME hogs in positive territory, in spite of sufficient numbers of heavy-weight hogs that pressured prices for market hogs and prices for pork at wholesale.

The afternoon’s average price of hogs in Iowa/Minnesota dropped 56 cents/cwt from Tuesday, to $116.15, USDA said.

Separate government data showed the afternoon’s wholesale pork price at $126.31/cwt, $1.65 lower than Tuesday.

Cooler temperatures are keeping hogs from losing as much weight as they would normally during hot weather, said Ginzel. Heavy hog weights lessened the impact of lost production from porcine epidemic diarrhea (PED), he said.

Speculators bought deferred hog contracts with the view that PEDv will lead to fewer hogs beginning this fall.

August closed up 0.55 cent/lb. at 116.4 cents, and October ended 0.525 cent higher at 102.2 cents.

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

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