Chicago Mercantile Exchange live cattle futures settled narrowly mixed on Monday as investors await this week’s cash prices, traders and analysts said.
CME live cattle traders are expecting cash cattle to trade no worse than steady with last week’s mostly $131-per-hundredweight (cwt) sales. Preliminary estimates show more cattle up for sale this week.
“They (packers) did not buy a lot of cattle last week but it was a holiday-shortened kill week. We’ve got a lot more cattle for sale this week,” said Domenic Varricchio, commodities broker at Schwieterman, Inc.
Packers are buying cattle for post-Thanksgiving production, which is supportive for cash prices.
And there is sentiment that grocers will feature more beef after evaluating how much ham and turkey cleared meat cases during the holiday.
The U.S. Department of Agriculture’s Monday morning wholesale choice beef price was at $201.35/cwt, $2.43 higher than on Friday. Select cuts climbed $1.43, to $188.25/cwt.
“Everyone is trying to figure out what post-Thanksgiving wholesale demand is going to be, in both beef and pork,” said Dale Durchholz, analyst at AgriVisor Services.
Traders are keeping an eye on packer margins that improved slightly with the recent gain in wholesale beef prices and last week’s lower cash values.
Beef packer margins on Monday were at a negative $63.60 per head, compared with a negative $66.45 on Friday and a negative $36.50 a week ago, according to HedgersEdge.com.
CME live cattle traders shrugged off last Friday’s largely neutral USDA cattle-on-feed report. The data showed November cattle placements up 10 per cent year-over-year, which was within analysts’ expectations.
Live cattle futures for December finished down 0.4 cent per pound at 131.075 cents. February closed up 0.125 cent at 131.925 cents.
CME feeder cattle drew pressure from firm corn prices.
January ended 0.7 cent/lb. lower at 162.8 cents, while March ended at 162.8, down 0.575 cent.
Pork price weighs on hogs
CME hog futures traded narrowly mixed on Monday, pressured by weak wholesale pork prices while speculation about the spread of the pig virus on U.S. farms lent support, traders and analysts said.
USDA on Monday morning reported the wholesale pork price was down 65 cents from Friday to $89.03/cwt.
Wholesale pork prices continue to decline as fresh pork supplies are boosted by an active kill pace of record heavy-weight hogs.
“Record-high weights continue to be an issue in the hog market,” Durchholz said. “Weights going up is an indication that we are back logging marketings as the cash market slips lower.”
Cash hog prices in the closely watched Iowa/Minnesota direct were not available early on Monday, but hog brokers expected a steady cash trade.
Front-month December futures traded at a premium to CME’s lean hog price index of 81.94 cents/lb. which also dragged on the contract.
Back-month hog contracts found support from continued concerns regarding the porcine epidemic diarrhea virus (PEDv) and the disease’s effects on slaughter supply in the spring and summer months, analysts said.
December hogs closed down 0.025 cent at 85.6 cents. February hogs closed up 0.125 cent at 89.8 cents.
— Meredith Davis reports on U.S. ag commodities for Reuters from Chicago.