U.S. livestock: More CME live cattle selling as cash prices plunge

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters –– Chicago Mercantile Exchange live cattle ended lower in volatile trade on Thursday, pressured by residual fund liquidation and the steep drop in cash prices, traders said.

CME live cattle’s selloff extended losses to eight straight days.

The February contract’s limit-down move on Tuesday delayed the “roll” by funds out of that contract into back months, which is tied to the Standard + Poor’s Goldman Sachs Commodity Index (S+P GSCI) roll procedure that officially ended on Wednesday.

So far, slaughter (cash) cattle in Kansas and Texas traded at $164 per hundredweight (cwt), down as much as $6 from last week, feedlot sources said (all figures US$).

Packers cut cash bids based on current futures prices and the potential for increased supplies ahead.

And the morning’s mixed wholesale beef market suggests pushback from retailers against near record-high prices for product, a trader said.

Thursday morning’s choice wholesale beef slipped 65 cents/cwt from Wednesday to $263.16. Select were up $1.04, to $254.72, the U.S. Department of Agriculture said.

Despite Thursday’s selloff, futures remained at a sizable discount to cash prices which stirred sporadic bargain hunting.

Investors on Friday will even up positions before Monday’s U.S. Martin Luther King, Jr. holiday while waiting for prices for unsold cattle.

Live cattle February closed 1.55 cents per pound lower at 154.2 cents, and April 1.525 cents lower at 152.8 cents.

CME feeder cattle fell hard, with nearby contracts down the 4.5-cents/lb. price limit, on technical selling and live cattle market losses.

January and March finished at 215.65 cents and 205.6 cents, respectively. Feeder cattle’s trading limit will expand to 6.75 cents on Friday.

Hogs close mixed

CME hogs drew pressure from weak fundamentals, but were supported by speculative buying in anticipation of a seasonal cash price turnaround, traders said.

February closed 0.4 cents/lb. lower at 75.625 cents, and April ended up 0.35 cents, to 78.35 cents.

Slaughter hog prices in the Midwest on Thursday morning sold steady to down 50 cents/cwt from Wednesday, regional hog dealers said.

Thursday morning’s wholesale pork price sagged $1.31/cwt from Wednesday, to $83, USDA said.

The break in wintry weather increased the delayed movement of hogs that farmers held back because of icy roads and to keep heat in swine buildings at that time, an analyst said.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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