U.S. livestock: Slumping stock market pressures CME live cattle

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle contracts posted modest losses on Wednesday amid investor jitters over fallen U.S. stock futures and uncertainty about cash price direction, traders said.

Funds heavily invested in equities typically have a wide range of commodities in their portfolios, including CME livestock.

February live cattle closed 0.25 cent/lb. lower at 136.525 cents, and April ended down 0.05 cent, to 137.3 (all figures US$).

The four-day wholesale beef price rally lifted last week’s cash values. But some are unsure how long robust beef demand will last given cheaper pork and poultry.

Market-ready, or cash, cattle sellers in Texas and Kansas are asking more than $140 per cwt with no bids from packers, said feedlot sources. A week ago, cash cattle fetched $133-$136.

Wednesday morning’s wholesale choice beef price jumped $4.47/cwt from Tuesday, to $226.78. Select cuts rose $4.22, to $220.83, based on U.S. Department of Agriculture data.

Funds sold the February contract, and simultaneously bought deferred months, ahead of similar moves expected on Friday in association with the Standard & Poor’s Goldman Sachs Commodity Index (S+PGSCI).

Friday is the first of five days of the process known as the S+PGSCI “roll.”

“Spread, or pre-roll, pressure kept a lid on futures today,” said Vetterkind Cattle Brokerage president Troy Vetterkind.

Light deferred-month live cattle futures buying underpinned CME feeder cattle contracts. January closed 0.55 cent/lb. higher at 168.325.

Weak hog futures

CME lean hogs eased on pre-Goldman roll activity and soft cash prices, traders said.

Spot February finished 0.275 cent/lb. lower at 60.825 cents, and April ended down 0.225 cent, to 65.85 cents.

Wednesday morning’s average cash hog price in Iowa/Minnesota at $49.87/cwt was down 20 cents from Tuesday.

Sufficient supplies and higher-than-expected USDA weekly hog weight results rattled investors worried about increased pork tonnage.

The weight data implies hogs may have backed up on farms over the Christmas and New Year’s holiday, traders and analyst said.

But, they said, the true extent of hog weights will not be known until after this week, the first full post-holiday week of production.

The recent run-up in wholesale beef values pulled corresponding pork prices higher.

The morning’s wholesale pork price was up 95 cents/cwt to $70.84 from Tuesday, USDA said.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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