U.S. livestock: Sluggish beef demand sinks CME live cattle

(Canada Beef Inc. photo)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures settled sharply lower on Thursday, with the June contract down by its three-cent/lb. daily price limit, as sluggish beef demand threatened to pressure cash prices by Friday, traders said.

Lightly-traded April live cattle, which has no limit on the final two days before expiration on Friday, closed 3.15 cents/lb. lower at 122.85 cents (all figures US$).

June ended limit down at 114.8 cents/lb.; August finished 2.95 cents lower at 111.75 cents. Live cattle’s trading limit will be expanded to 4.5 cents on Tuesday.

Beef cutout values have fallen six days in a row due to plentiful cattle, less-expensive pork and less-than-ideal spring grilling weather in parts of the country, said traders.

Declining wholesale beef values trimmed packer profits, one trader said.

Thursday morning’s wholesale choice beef price sagged $1.60/cwt from Wednesday to $213.21. Select cuts were $1.29 lower at $204.30, the U.S. Department of Agriculture said.

Packers tabled $123-$124/cwt bids for market-ready, or cash cattle in the U.S. Plains with sellers asking $130, said feedlot sources. Last week, cash cattle moved at $125 to $128.

Thursday’s average beef packer margin was estimated at a positive $43.50 per head, down from a positive $65.30 on Wednesday, as calculated by HedgersEdge.com.

Heavy CME live cattle losses pressed most of the exchange’s feeder cattle contracts down by their 4.5-cent/lb. price limit.

April feeder cattle , which expired at noon CT, closed 0.775 cent/lb. lower at 145.525 cents.

May, the new spot month, and August ended limit down at 140.575 and 139.8 cents, respectively. The limit will be expanded to 6.75 cents on Friday.

Hog futures extend gains

Technical buying and upward-trending cash prices lifted CME lean hogs for a second straight session, traders said.

Thinly traded May ended 0.775 cent/lb. higher at 77.325 cents, and most-active June closed 1.3 cents higher at 80.775 cents.

Government data on Thursday showed the morning average cash hog price in Iowa/Minnesota up 28 cents/cwt from Wednesday to $68.22.

Thursday morning’s wholesale pork price at $81.61 was down 41 cents from Wednesday, snapping a three-day win streak, according to USDA data.

Packers will avoid paying more for hogs if they are unable to sell pork to grocers and current prices, a trader said.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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