Chicago | Reuters — U.S. live cattle futures fell on Wednesday in a light profit-taking setback following a four-session climb, and on spillover weakness from declines in Wall Street equity markets, traders said.
However, continued strength in wholesale beef prices and expectations of higher cash cattle prices this week underpinned the market.
Chicago Mercantile Exchange April live cattle futures settled down 0.475 cent at 122.625 cents/lb., and March feeder cattle futures ended down 1.4 cents at 140.075 cents/lb. (all figures US$).
“We rallied and … once we could not extend it a little bit more, profit-taking came into play. Plus you had a little bit stronger dollar,” said Matthew Wiegand, broker with FuturesOne.
The firmer dollar tends to make U.S. agricultural products less competitive globally, while declines in equity markets can threaten consumer demand for pricey cuts of beef.
Yet wholesale beef prices remain firm, extending a rally that began in early January. Choice cuts up were up another 60 cents on Wednesday afternoon at $229.66/cwt and select cuts were up $1.66 at $218.99, according to the U.S. Department of Agriculture.
Packer margins remain strong, raising expectations of a higher cash cattle trade this week.
Feedlot operators were asking $114-$115/cwt for market-ready cattle in Kansas and Texas, traders said, while bids emerged in Kansas at $112. Fat cattle traded last week at around $110/cwt.
The pace of the U.S. cattle slaughter picked up to 119,000 head on Wednesday, from 117,000 on Tuesday, normalizing after a winter storm crossed the Plains earlier this week, dumping more than a foot of snow on parts of Nebraska and Iowa.
CME lean hog futures closed lower on profit-taking after a five-session climb. April hogs settled down 0.65 cent at 76.3 cents/lb., a day after recording a life-of-contract high at 77.6 cents.
“It does look like more consolidation-type action right now, until we find another story to get the market a little more excited,” Wiegand said.
Traders await USDA’s weekly export sales report on Thursday to get a gauge of export demand for U.S. pork and beef.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.