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

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle ended lower on Monday, pressured by profit-taking and funds that sold or “rolled” April contracts and simultaneously bought deferred months, traders said.

Funds involved in CME’s livestock markets that follow the Standard + Poor’s Goldman Sachs Commodity Index (S+P GSCI) shifted their April positions in a process known as the S+P GSCI roll.

Monday was the second of five days for the S+P GSCI roll procedure.

Investors await this week’s market-ready (cash) cattle prices after short-bought packers last week spent more for supplies.

A week ago, cash cattle in the U.S. Plains sold at mostly $161 to $162 per hundredweight (cwt), up from $158 to $160 the previous week, feedlot sources said (all figures US$).

Traders are eyeing tepid beef sales versus cheaper pork, and with East Coast residents digging out from recent snow storms that hurt consumption.

Monday morning’s choice wholesale beef price fell 70 cents/cwt from Friday to $247.78. Select cuts rose 99 cents to $245.38, the U.S. Department of Agriculture said.

April closed 0.65 cents/lb. lower at 154 cents, and June down 0.95 cent at 146.15 cents.

CME feeder cattle contracts dipped on profit-taking, firm corn prices and live cattle market weakness.

March closed down 0.025 cent/lb. at 209.7 cents, while April ended 0.175 cent lower at 208.4 cents.

Hog futures sag

CME lean hogs eased on softer cash hog prices and deferred-month futures’ premiums to the exchange’s hog index for March 5 at 67.92 cents, traders said.

April closed down 0.05 cent/lb. at 66.075 cents, and June was 0.675 cent lower at 76.575 cents.

USDA data showed the average cash hog price in Iowa/Minnesota on Monday morning fell $1.62/cwt from Friday to $62.10.

Sufficient supplies and lacklustre domestic and export pork sales, pegged to the dollar’s surge to an 11-1/2 year high and buildup of pork on U.S. West Coast docks, were bearish futures factors.

Still, speculative buyers are betting that warmer weather and less-costly pork will soon reignite meat demand in time for spring grilling.

“Pork is so cheap that at some point, whether its China or whomever, is going to come in and clean up some of that cheap product,” said Kip Crook, president of KPC Trading, Inc.

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

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