U.S. livestock: CME live cattle sag before USDA report

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures settled weaker on Friday ahead of the U.S. Department of Agriculture’s monthly Cattle on Feed report at 2 p.m. CT, said traders.

Analysts, on average, expect the report to show 8.4 per cent more cattle were placed into U.S. feedlots in December than a year earlier.

February live cattle closed 0.375 cent/lb. lower at 118.325 cents, and April down 0.25 cent to 117.325 cents (all figures US$).

Investors looked ahead to next week’s prices for slaughter-ready, or cash, cattle that this week brought mostly $122/cwt, nearly matching last week’s sales.

Processors are mindful of their extremely negative margins and may continue to curb production and lower cash bids as a result, a trader said regarding next week’s cash price prospects.

Market participants will closely monitor beef cutout values that could move up as packers trim slaughters and grocers feature product for early February.

Friday’s average beef packer margins were a negative $74.10 per head, up from negative $82.85 on Thursday, as calculated by HedgersEdge.com.

Friday morning’s choice wholesale beef price, or cutout, rose 69 cents/cwt from Thursday to $193.69. Select cuts were up 14 cents to $189.88, USDA said.

CME March feeder cattle was supported by its discount to the exchange’s feeder cattle index for Jan. 25 at 132.62 cents.

Other feeder cattle contracts were pressured by live cattle futures weakness.

March closed up 0.350 cent per pound at 127.45 cents. April was unchanged at 126.75 cents and May down 0.025 cent to 125.125 cents.

Hogs close higher

Short-covering and technical buying reversed some of Thursday’s CME lean hog losses, said traders.

February hogs ended 1.05 cents/lb. higher at  66.9 cents, and April 1.075 cents higher at 68.3 cents.

Friday morning’s firmer wholesale pork values and anticipation of steady to firmer cash prices provided additional futures support, said traders and analysts.

“I think some packing houses are short on supplies for next week and some of them will pay up for hogs today,” a western Corn Belt hog merchant said.

He was less concerned about a potential U.S. trade war with Mexico, a major pork importer, after the leaders of both countries spoke by phone on Friday.

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

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