U.S. livestock: Drop in beef prices weighs on CME live cattle futures

Chicago/Reuters – Chicago Mercantile Exchange live cattle futures fell on Tuesday, weakened by lower wholesale beef prices that could pressure cash values later this week, traders said.

Spot December closed 1.450 cents per lb lower at 140.225 cents, and February 1.050 cents lower at 142.650 cents.

Tuesday morning’s wholesale choice beef price sagged 61 cents per cwt from Monday to $219.00. Select cuts were down 81 cents to $211.71, the U.S. Department of Agriculture said.

“For the next couple of weeks we may find some beef features that may impact demand, but as a whole it’s turkey time,” said AgriVisor Services senior market analyst Dale Durchholz.

Lackluster wholesale beef demand hurt packer profits, making them less likely to pay more for cattle than they did last week, traders and analysts said.

A week ago, cash cattle in the U.S. Plains sold at $133 to $138.50 per cwt.

Tuesday’s average beef packer margin was negative $21.70 per head, down from a negative $19.85 on Monday and a negative $16.35 a week ago, as calculated by HedgersEdge.com.

Funds at times sold December CME live cattle and lean hog futures, and simultaneously bought deferred trading months, ahead of similar moves expected later in the week in accordance with the Standard & Poor’s Goldman Sachs Commodity Index (S&PGSCI).

The first of five days of the process, known as the S&PGSCI “roll,” will officially begin on Friday.

CME feeder cattle spot-November closed 1.625 cents per lb lower at 190.650 cents, following live cattle futures selling and steady to $2 per cwt lower cash feeder cattle prices.

Hog futures close flat to lower

Sagging cash prices and technical selling pressured CME lean hogs, traders said.

Spot December closed unchanged at 58.225 cents, February 0.900 cent lower at 61.075 and April ended 0.925 cent lower at 65.950.

“You’ve got seasonally bigger hog numbers as we grind toward the end of the calendar year,” said Durchholz, adding that shoppers are exhausted after being inundated with pork during October Pork Month.

Cash hog prices in western Midwest market on Tuesday morning was at $62.23 per cwt, down $1.17 from Monday and more than $7 lower than last week, the USDA said.

On Tuesday, packers processed 435,000 hogs, 10,000 more than a week ago, based on USDA estimates.

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