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

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed lower Tuesday, pressured by profit-taking and fund selling on the final trading day for the quarter, traders and analysts said.

October live cattle closed down 0.5 cent per pound to 160.45 cents, and December one cent lower at 163.475 cents (all figures US$).

Despite the market’s four-session win streak prior to Tuesday, investors remain defensive about fundamental market direction this week.

Unprofitable packer margins and slow wholesale beef demand raise concerns about whether processors will bite the bullet and buy cattle or continue to cut slaughters, said Allendale Inc. chief strategist Rich Nelson.

Tuesday morning’s choice wholesale beef price rose $1.49 per hundredweight (cwt) from Monday to $239.51. Select slipped 16 cents, to $226.67, the U.S. Department of Agriculture said.

Beef packer margins were a negative $74.30 per head, compared with a negative $91.20 on Monday and a negative $83.20 a week ago, according to Colorado-based analytics firm HedgersEdge.com.

Last week, a small number of cash cattle in Nebraska moved at $157 to $159/cwt, and fewer than 1,000 head traded at $158 in Kansas, said USDA.

CME feeder cattle marked an all-time high, fueled by $2 to $6/cwt higher prices for feeder cattle in local markets.

USDA’s bearish quarterly grain stocks report stirred feeder cattle futures buying with the view that cheaper grain will ease input costs for feedlots.

October closed 0.775 cent/lb. higher at 235.425 cents, and November at 235.05 cents, up 0.55 cent.

Mostly higher hogs settlement

CME lean hogs finished mostly higher on short-covering, but fund selling pulled down the December contract, traders said.

October hogs closed 0.65 cents/lb. higher at 107.975 cents. December finished down 0.325 cent, to 94.525 cents. February ended up 0.475 cent, at 90.425 cents.

The October contract drew more support from strong wholesale pork prices as supermarkets gear up for National Pork Month in October.

USDA’s data showed the morning’s wholesale pork price gained $1.06/cwt from Monday to $121.75.

Market participants anxiously await the afternoon prices for slaughter-ready or cash hogs.

Bullish traders contend that packer may commit to at least steady cash bids based on their profitable margins and strong wholesale pork prices.

Contrarians said recent cash hog price weakness could indicate that cash hog prices may have topped out as supplies start to grow seasonally.

Tuesday morning’s average hog price in Iowa/Minnesota dropped $1.87/cwt from Monday to $106.55, USDA said.

HedgersEdge.com estimated pork packer margins for Tuesday at a positive $25.20 per head, compared with a positive $15.95 on Monday and a positive $10.80 a week ago.

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

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