Chicago | Reuters — Chicago Mercantile Exchange live cattle closed narrowly mixed on Tuesday after a volatile session, pressured by lower wholesale beef values but supported by futures’ discount to last week’s cash prices, traders said.
October live cattle finished down 0.05 cent per pound at 155.45 cents, and December up 0.075 cent to 158.725 cents (all figures US$).
Tuesday morning’s choice wholesale beef price slumped $1.92 per hundredweight (cwt) from Monday to $241.10. Select slipped 38 cents to $228.09, the U.S. Department of Agriculture.
Beef demand usually drops after Labour Day, as indoor meals replace backyard barbecues. Furthermore, retailers eye pork for National Pork Month in October and hams for the winter holidays.
Slack wholesale beef demand and unprofitable packer margins might keep a lid on prices for market-ready or cash cattle this week, said traders.
Last week, cash cattle in the U.S. Plains fetched $159-$160/cwt, feedlot sources said.
Tuesday’s beef packer margins were a negative $64.30 per head, compared with a negative $83.20 on Monday and a negative $45 a week ago, according to Colorado-based analytics firm Hedgersedge.com.
Spread trading dominated the session, which included bull spreads consisting of investors who bought the December contract and simultaneously sold the February trading month.
CME feeder cattle futures finished higher, lifted steady to $3 per cwt better prices for feeder cattle in local markets.
Additionally, feeder cattle contracts edged upward as corn prices drifted lower.
September feeder cattle closed 0.6 cent per pound higher at 230.9 cents, and October 0.875 cent higher at 230.15 cents.
Mixed hogs settlement
CME lean hogs closed mixed following an up-and-down day, sometimes supported by strong wholesale pork values but pulled down by fund liquidation, traders said.
October hogs closed 0.575 cent/lb. higher at 107.875 cents. December ended at 95.25 cents, down 0.45 cent and below the 100-day moving average of 95.59 cents.
USDA data showed the morning wholesale pork price jumped $1.52/cwt from Monday to $117.12, helped by higher costs for ribs and picnic shoulder cuts.
Profitable margins and solid wholesale pork demand recently encouraged packers to spend more for slaughter-ready or cash hogs, traders and analysts said.
However, some investors maintain that cash hog prices could top out seasonally during cool fall temperatures that allow animals to gain weight quicker.
USDA’s morning direct cash hog prices were unavailable. Hogs in the Midwest traded steady to firm, according to Midwest hog dealers.
CME hogs fluctuated throughout the session as some investors adjusted positions ahead of the government’s quarterly hog report on Friday, a trader said.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.