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

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Friday posted losses for a fourth consecutive session, partly on caution before Friday’s U.S. Department of Agriculture’s monthly Cattle on Feed report at 2 p.m. CT, traders said.

Analysts polled by Reuters, on average, believe that July 2016 cattle placements increased modestly compared to the same period a year ago.

August live cattle ended down 0.025 cent/lb. to 113.55 cents (all figures US$). Most actively traded October closed 0.325 cent lower at 110.25 cents.

The morning’s soft wholesale beef values and this week’s disappointing cash prices contributed to bouts of pre-weekend futures selling, said traders and analysts.

They added that bullish investors were defensive given the possibility that packers may again lower cash bids next week with more cattle becoming available as plants prepare to close for the Sept. 5 Labour Day holiday.

“We’ve realized there is an adequate supply of cattle right now. And we’re waiting now for this next big bulge in supplies forecasted for mid-September,” said Allendale Inc. chief strategist Rich Nelson.

This week, market-ready, or cash, cattle in the U.S. Plains sold at mostly $117-$118/cwt, steady to $2 lower than a week ago, said feedlot sources.

The morning’s choice beef price fell 71 cents/cwt from Thursday to $200.15. Select cuts slipped 13 cents to $194, USDA said.

Short-covering and technical buying lifted CME feeder cattle futures. August feeders closed 1.05 cents/lb. higher at 146.075 cents.

Higher hog market close

Short-covering and buy stops sent CME lean hogs higher in late-session activity, said traders.

In a trading strategy known as spreading, some market participants bought lean futures and sold live cattle contracts as the morning progressed.

October ended up 1.225 cents/lb. to 61.925 cents, and December finished one cent higher at 57.45 cents.

Futures gained ground despite the morning’s weaker cash and wholesale pork prices.

Friday morning’s wholesale pork price sagged 70 cents/cwt to $73.66 from Thursday, USDA said.

The government reported Friday morning’s average cash hog price in Iowa/Minnesota declined 43 cents/cwt from Thursday to $63.99 in light volume.

Most packer inventories are full for next week due to ample supplies that have also weighed on pork cutout prices, said traders and analysts.

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

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