U.S. livestock: CME live cattle tumble limit down

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures finished Monday’s session down by their three cents/lb. daily price limit after late Friday’s cash prices fell short of expectations, traders and analysts said.

Spot December finished at 127.675 cents/lb., and February at 129.65 cents (all figures US$). Live cattle’s trading limit will be expanded to 4.5 cents on Tuesday.

“I don’t know what will stop this rout down the abyss,” said Oak Investment Group president Joe Ocrant, citing futures’ recent retreat and Friday’s cash price weakness.

Last Friday, packers paid $126 to $129/cwt for market-ready, or cash, cattle in the U.S. Plains, as much as $5 lower than in the previous prior, said feedlot sources.

Processors reduced slaughters and curbed cash spending to grow their margins and reinvigorate wholesale beef demand, which has suffered at the hands of heavyweight cattle and active turkey advertisements for Thanksgiving, traders said.

Monday morning’s wholesale choice beef price gained 47 cents/cwt from Friday, to $209.77. Select cuts fell 81 cents, to $109.24, based on U.S. Department of Agriculture data.

Separate USDA estimates showed packers on Monday processed 106,000 head of cattle, 5,000 less than a week ago.

The average beef packer margin for Monday was a negative $38.08 per head, compared with a negative $17.15 on Friday, as calculated by HedgersEdge.com.

Deep live cattle market losses and the lower cash feeder cattle price outlook pulled CME feeder cattle futures lower, with spot November closing at 172.3 cents, down 2.775 cents.

Limit-down hog settlement

CME lean hogs closed down their three cents/lb. daily price limit to a six-year low on downward-trending cash prices and spillover live cattle market pressure, traders said.

Spot December and February ended at 51.8 cents and 54.05 cents, respectively.

Cash hog prices in Iowa/Minnesota on Monday morning fell 67 cents/cwt from Friday to $51.83, posting two days of declines after Thursday’s modest uptick, according to USDA.

“There are plenty of hogs considering last week’s record-high pork output and the biggest weekly kill so far this year,” a trader said.

The government estimated Monday’s hog slaughter at 438,000 head, 8,000 more than last week during the same period.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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