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

(CMEGroup.com)

Chicago | Reuters — Chicago Mercantile Exchange live cattle closed lower Friday, pressured by profit-taking following futures’ sharp rally on Thursday, traders said.

“Investors are looking at the fact that futures overdid it to the upside yesterday,” said Oak Investment Group president Joe Ocrant, who also cited weaker cutout values.

Friday morning’s wholesale choice beef price, or cutout, dipped 33 cents per hundredweight (cwt) from Thursday to $233.32 (all figures US$). Select cuts sagged $1.03 to $222.74, said the U.S. Department of Agriculture.

Retailers are not actively booking beef at current prices for spring grilling, which discouraged futures buyers and pulled down the cutout, a trader said.

On Monday, investors will await the sale of market-ready, or cash, cattle against the backdrop of a seasonal bump in supplies and beef demand uncertainty.

This week, cash cattle in Texas and Kansas moved at mostly $143/cwt, down $1 from last week. Cash cattle in Nebraska sold at $143, $2 to $3 lower than a week ago.

Moderate fund selling developed after nearby live cattle contracts briefly slipped below moving average support levels.

June ended at 137.8 cents, down 0.225 cent and above where the 10-day and 20-day moving averages converged at 137.629.

August dropped 0.575 cent to 138.6 cents, and almost par with the 10-day moving average of 138.605.

CME feeder cattle settled steady to firm, underpinned by lower corn prices that may ease input costs for feedlots.

August finished unchanged at 197.05 cents. September was up 0.05 cent to 198.125 cents, and October at 198.425 cents, up 0.025 cent.

Cash woes pressure hog futures

CME hogs ended lower as packers continue to rely on heavy-weight animals to keep a lid on cash prices, a trader said.

The morning’s average hog price in the western Midwest fell $2.20 per cwt from Thursday to $106.92, USDA said.

Futures’ remained overpriced based on CME’s hog index, at 110.83, which deterred would-be buyers.

“There is not only no good news out there, but no stable news,” said James Burns, president of JBS Trading Co.

Still, lighter-weight hogs made scarce by the porcine epidemic diarrhea virus (PEDv) commanded steady to $1/cwt higher money in parts of the Midwest.

Fewer light-weight hogs suggest another round of tighter supplies from PEDv may be close at hand, Midwest hog dealers said.

June futures drifted close to a three-month low after investors simultaneously sold that contract and bought deferred months in a trading strategy known as bear spreading.

June hogs ended down 0.95 cent/lb. at 113.35 cents, and July was down 0.125 cent at 120.475.

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

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