Chicago Mercantile Exchange live cattle futures closed mixed on Tuesday, with the December contract supported by steady cash expectations for this week while bearish spreads pressured the February contract, traders said.
Cash cattle asking prices in Texas and Kansas surfaced at $134 per hundredweight (cwt) with no bids from packers, feedlot sources said. Last week, cattle in both states sold at $132, while $131 to $132 traded in Nebraska (all figures US$).
“The (cash) market has been unable to get much above a $132 to $133 trade and it looks like that is going to be the case this week,” KIS Futures analyst Lane Broadbent said.
Although overall cattle numbers remain tight, packers may be selective this week due to more animals available for sale. Unprofitable margins and tepid wholesale beef demand may restrict how much processors will spend for supplies.
Tuesday afternoon’s wholesale choice beef price fell 40 cents from Monday to $202.12/cwt, and select cuts slipped 11 cents to $188.01, based on U.S. Department of Agriculture data.
According to HedgersEdge.com, beef packer margins for Tuesday were at a negative $41.50 per head, compared with a negative $54.05 on Monday and negative $14.85 a week ago.
Spot December live cattle closed up 0.075 cent/lb. at 131.675 cents. February ended down 0.4 cent at 132.65 cents.
CME feeder cattle ended higher, with support from weaker Chicago Board of Trade corn prices. Cheaper corn may encourage feedlots to buy young cattle.
CBOT corn sagged on profit taking and technical selling after the March contract neared a one-month high, traders said.
The closely-followed Oklahoma City feeder cattle market was closed on Monday due to inclement weather, but light sales were reported on Tuesday at steady prices, a stockyard source said.
January feeder cattle ended 0.4 cent/lb. higher at 165.55 cents, and March closed at 165.475 cents, up 0.075 cent.
Fund selling pressure hogs
Fund liquidation and profit-taking pushed CME hogs lower on Tuesday, traders and analysts said.
February futures triggered sell stops after dropping below the 10-day moving average of 89.61 cents.
Funds also sold the February contract and bought April and May ahead of December future’s expiration on Dec. 17.
February, which will assume lead-month duties after the December contract expires, is at a sizeable premium to CME’s hog index of 81.98 cents.
Lower cash hog prices further weakened nearby hog futures. Most packers have this week’s needs met despite the onset of wintry weather in the Midwest.
USDA data on Tuesday afternoon quoted the closely-watched Iowa/Minnesota hog market at $77.56/cwt, $1.86 lower than on Monday.
Bitterly cold temperatures across portions of the U.S. Plains slowed hog movement and will likely slow animal weight gains, a trader said.
Spot December ended 0.55 cent/lb. lower at 80.825 cents. February hogs closed 1.125 cents lower at 88.725 cents.
— Meredith Davis reports on U.S. ag commodities for Reuters from Chicago. Additional reporting for Reuters by Theopolis Waters.