Chicago/Reuters – Chicago Mercantile Exchange live cattle futures finished lower on Thursday, hit by profit-taking and early-session technical selling, traders said.
Investors sold the October contract and simultaneously bought deferred months, in a trading strategy known as bear-spreading.
Most actively traded December live cattle closed 1.300 cents per pound lower at 104.075 cents, and February finished 1.025 cents per pound lower at 105.275 cents.
Futures retreated after a scant number of slaughter-ready, or cash, cattle in Kansas traded at $105 per cwt, which was steady with a week ago there. Last week, the bulk of cash cattle in the U.S. Plains moved at $104 to $105.
Remaining cash cattle in the Plains were bid $103 per cwt versus up to $108 asking prices.
“The steady cash trade this morning at $105 in western Kansas initially dampened enthusiasm this morning and has given live cattle futures permission to take a well-deserved rest, said Cassandra Fish, author of industry blog The Beef.
However, she added that feedlots in western Nebraska, where numbers are tight, have passed on those bids and there is a chance they will get $106.
Bullish traders are betting that highly-profitable packer profits, Wednesday’s $104 to $106 per cwt Fed Cattle Exchange sales and the recent seasonal turnaround in wholesale beef prices will lend support to subsequent cash prices.
Thursday morning’s choice wholesale beef price rose $1.74 per cwt from Wednesday to $189.18. Select cuts were up 29 cents to $174.22, the U.S. Department of Agriculture said.
Average beef packer margins for Thursday were a positive 116.85 per head, up from a positive $108.05 on Wednesday, as calculated by HedgersEdge.com.
Profit-taking, technical selling and CME live cattle market losses sank the exchange’s feeder cattle futures.
November feeders finished down 0.725 cent per lb to 125.850 cents. Most actively-traded January closed 2.175 cents lower at 118.75 cents.
Lower hog futures close CME
CME lean hogs drew pressure from profit-taking and weaker cash prices amid ample supplies, traders said.
Additionally, investors implemented bear-spreading that consisted of selling the December contract while at the same time buying deferred trading months.
December lean hogs closed 0.825 cents per lb lower at 47.000 cents, and February down 0.500 cent to 53.500 cent.
USDA data on Thursday morning showed cash hog prices in Iowa/Minnesota averaged $44.35 per cwt, 80 lower than on Wednesday.