U.S. livestock: CME live cattle slump on profit-taking

(CMEGroup.com)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures settled lower Monday, weighed down by profit-taking and fund liquidation, traders said.

December closed 1.4 cents per pound lower at 169.5 cents, and February off 2.125 cents at 170.025 cents (all figures US$).

Investors initially sold February and simultaneously bought December, which is known as bull spreads, following last Friday’s steady-to-better prices for market-ready or cash cattle.

Last week, some cash cattle in the U.S. Plains fetched as much as $174 per hundredweight (cwt), which surpassed the previous week’s record of $172.

Packers who were short bought supplies despite plants scheduled to be closed at least one day for the U.S. Thanksgiving holiday, traders said.

Processors perhaps may again spend more for cattle as they buy for the first full week of production after Thanksgiving.

Investors also implemented bull spreads in response to Friday’s U.S. Department of Agriculture monthly Cattle-On-Feed report, considered mildly bearish for the February contract. [Related story]

Friday’s report showed the number of cattle placed in U.S. feedlots last month slowed down versus a year ago, but not as much as expected.

Plant holiday shutdowns and grocers preparing to feature roasts and ribeyes after Thanksgiving should underpin wholesale beef prices in the near term, said analysts and traders.

Monday morning’s choice wholesale beef price was up $1.18/cwt from Friday to $256.40. Select gained 25 cents to $242.18, the USDA said.

Most thinly-traded CME feeder cattle contracts ended down the three-cents-per-pound daily price limit, pressured by live cattle market selling and fund liquidation.

January and March settled at 233.35 cents and 231.45 cents.

Hogs up but off highs

CME lean hogs closed firm on short-covering and fund buying that subsided as the session progressed given directionless fundamentals, a trader said.

December closed 0.675 cent/lb. higher at 91.325 cents, and February settled up 0.05 cent at 90.5 cents.

The average hog price in the eastern Midwest was down 46 cents/cwt from Friday at $83.63, according to USDA.

Separate government data showed the morning’s wholesale pork price gained 26 cents/cwt from Friday to $93.65.

Some processors have sufficient supplies before Thanksgiving, while others are already purchasing animals for post-holiday production, an analyst said.

Pork demand could suffer when consumers grow weary of eating ham and turkey over the holiday, he said.

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

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