Chicago Mercantile Exchange live cattle futures settled narrowly mixed on Monday as funds sold, or rolled, the February contract and mainly bought the April month, traders said.
That shift by CME live cattle and hog fund investors was made in conjunction with the monthly process known as the “roll” by followers of the Goldman Sachs Commodity Index (S+PGSCI).
Monday was the fourth of five days for the S+PGSCI roll procedure.
February live cattle closed down 0.1 cent per pound to 136.6 cents and April finished at 137.075 cents, up 0.1 cent (all figures US$).
Profit-taking stirred by uneasiness about cash cattle and beef prices maintaining their record-setting pace pared early-session gains in CME live cattle futures.
The live cattle market trading at a discount to last week’s cash prices suggests that the cash market may be about to top out, said Vetterkind Cattle Brokerage president Troy Vetterkind.
“There is the idea out there that if they (packers) can put $4 or $5 on the market in a week, they can take $5 to $6 off in a week,” he said.
The morning’s wholesale price for choice beef was $216.74 per hundredweight (cwt) in light volume. That price was $1.76 higher than Friday’s record as the wholesale choice beef price notched its third straight record, according to the U.S. Department of Agriculture.
At $213.59/cwt, select cuts rose $2.01 from Friday while extending their record string to seven days in a row.
Packers intentionally upped the price of beef that they sell to end-users to counter the high cattle costs and realign their operating margins.
Beef packer margins for Monday were estimated at a negative $20.25 per head, compared with a negative $46.25 per head on Friday and negative $100.05 a week ago, as calculated by HedgersEdge.com.
Last week, cash cattle in the U.S. Plains moved at $139 to $140/cwt, eclipsing last week’s $137 to $138 record, feedlot sources said.
And grocers actively competed for beef that became scarce after plants shut down during the Christmas and New Year’s holidays. Harsh weather last week slowed down cattle weight gains and snarled the transportation of cattle to market.
Weak deferred-month CME live cattle and fund liquidation undermined feeder cattle futures.
January feeder cattle closed at 167.825 cents/lb., down 0.825 cent. March finished at 166.475 cents/lb., 1.175 cents lower.
Hogs down with pork prices
Monday morning’s wholesale pork price pullback deterred CME hog futures buyers who believe lower cash prices may follow, traders said.
“Packers are not going to chase the hogs if they can’t move the meat. And hogs are on the move after getting delayed by nasty weather early last week,” a trader said.
The morning’s government data showed the wholesale pork price at $82.50/cwt, $1.55 lower than on Friday.
USDA data showed Monday morning’s average price of hogs in the eastern Midwest down 55 cents/cwt from Friday at $76.12.
Separate government data estimated packers on Monday slaughtered 430,000 hogs, 124,000 more than last week.
April futures led losses after the contract moved below the 100-day moving average of 90.54 cents.
February hogs closed 0.45 cent/lb. lower at 85.375 cents and April ended at 90.375 cents, 0.625 cent lower.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.