U.S. livestock: Profit-taking undercuts CME live cattle

(CMEGroup.com)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed lower on Tuesday, weighed down by profit-taking that pared morning gains and snapped the market’s three-day winning streak.

August live cattle ended 1.1 cents per pound lower at 150.5, and October down 1.325 cents at 147.225 cents (all figures US$).

CME live cattle spiked at first, driven by residual short-covering and futures’ discount to last week’s prices for market-ready, or cash, cattle.

Last week, cash cattle in the U.S. Plains fetched mostly $155 to $156 per hundredweight (cwt).

Sellers replaced buyers after August and October neared their respective 10-day moving average resistance levels of 151.98 and 149.44 cents.

Traders are conflicted about this week’s cash cattle returns given profitable packer margins and lower wholesale beef values.

Beef packer margins for Tuesday were a positive $86.85 per head, compared with a positive $70.75 on Monday and a positive $50.40 a week ago, according to Colorado-based analytics firm HedgersEdge.com.

Tuesday morning’s choice wholesale beef price sagged 97 cents/cwt from Monday at $254.13. Select dropped 68 cents to $245.89, the U.S. Department of Agriculture said.

“Judging by how much packers took off cash last week, I would not be surprised if cash traded steady at worst this week,” a trader said.

USDA will issue the monthly Cattle-On-Feed report on Friday.

Analysts expect the data to show a sizeable slowdown in cattle placed in feedlots last month when pricey calves discouraged some feedyards from buying them to fatten.

CME feeder cattle felt pressure from live cattle future’s selloff and fund liquidation.

August closed down 0.875 cent/lb. at 217.15 cents, and September at 214.25 cents, 1.825 cents lower.

Mixed hog futures close

CME hogs closed mixed with nearby contracts pressured by lower cash and wholesale pork prices, but remaining months drew support from speculative buying.

October ended down 0.275 cent at 94.825 cents/lb., and December at 88.625 cents, 0.25 lower.

February finished up 0.2 cent at 87.25 cents, and April at 86.9, up 0.1 cent.

Tuesday morning’s average price of hogs in the western Midwest dropped $1.75/cwt from Monday, to $100, USDA said.

Separate government data showed the morning wholesale pork price down $1.05/cwt from Monday to $109.97.

“It’s still a terminally soft cash market and product demand is sluggish,” said Archer Financial Services broker Dennis Smith.

Heavyweight hogs pulled down cash prices and added more pork into retail channels, said analysts and traders.

Speculators bought back-month hogs in anticipation of fewer animals for sale beginning this fall when the deadly pig virus on U.S. farms is expected to hurt production the most.

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

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