U.S. livestock: Profit-taking halts CME live cattle rally

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle contracts settled lower on Monday after profit-taking ended futures’ three-day win streak, traders said.

Fund selling surfaced after June and August slipped beneath their respective 10-day moving averages of 123.15 and 119.06 cents, which also tripped sell stops (all figures US$).

April live cattle ended down 0.3 cent/lb. at 134.075 cents. June closed 0.8 cent lower at 123.225 cents, and August finished 0.625 cent lower at 118.95 cents.

The April contract took the path of least resistance despite the morning’s firm beef cutout values and April’s discount to some of last week’s prices for market-ready, or cash, cattle.

A week ago, cash cattle in the U.S. Plains moved at $132-$136/cwt, said feedlot sources.

Packers needed cattle even though last week’s generally lower wholesale beef prices wore down their profits, a trader said.

The average beef packer margin on Monday was estimated at a negative $62.35 per head, down from a negative $54.50 on Friday and a negative $37.50 a week ago, as calculated by HedgersEdge.com.

Investors look for beef grilling demand to increase as cool, damp conditions in the Midwest give way to warmer, dryer weather over the next several days.

“This demand deal is just a little bit dead in the water to say the least right now. I think it will pick up as we get into the later part of the month going into May,” said John Nalivka, president of Sterling Marketing.

The morning’s wholesale choice beef price jumped $1.46/cwt from Friday, to $216.26. Select cuts rose 99 cents, to 206.24, the U.S. Department of Agriculture said.

Live cattle futures’ retreat, and steady to $2/cwt lower cash feeder cattle prices, pressured CME feeder cattle contracts. April closed down 0.35 cent, at 155.55 cents.

Lower hog futures settlement

Uncertainty regarding cash prices, along with back-month CME lean hogs’ premiums to the exchange’s hog index for April 7 at 66.57 cents, deterred futures buyers, traders said.

They said chart-related selling and CME live cattle market losses contributed to lean hog futures declines.

April, which will expire on Thursday, closed down 0.475 cent/lb. at 66.35 cents.

May closed 1.325 cents/lb. lower at 75.4 cents, and June ended 1.25 cents lower at 79.625 cents. Both contracts finished below their 10-day moving averages of 76.26 and 80.29 cents, respectively.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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