Chicago Mercantile Exchange live cattle futures settled mixed on Friday on profit taking after setting a record high for a lead contract earlier in the session.
October live cattle futures closed down 0.225 cent at 132.575 cents per lb after hitting a nine-month high of
December cattle settled up 0.100 cent to 132.975 cents. It set an eight-month high of 134.700 cents.
Late-session profit taking closed October lower to end CME live cattle’s five-day win streak. The uptrend was driven by this week’s record high cash cattle prices of mostly $132 per hundredweight (cwt) with help from robust wholesale beef demand.
“Beef demand was on fire, which surprised me. I know there is reduced product in the pipeline, but still beef prices were on a tear,” Oak Investment Group president Joe Ocrant said.
The smallest U.S. cattle herd in 61 years after lengthy droughts pushed up cash prices and reduced beef supplies for grocers and restaurants, analysts and economists said.
With all eyes on next week, investors took profits in anticipation of packers trimming slaughter to offset tight supplies and improve their margins.
Supermarkets may be reluctant to buy beef at current prices amid worries shoppers may turn to less-costly pork and chicken.
Friday evening’s USDA wholesale choice beef price was $200.97 per cwt, down 10 cents from Thursday. Select cuts slipped 28 cents to $185.40.
U.S. beef packer margins on Friday were estimated at a negative $41.35 per head, compared with a negative $33.60 on Thursday and a negative $44.30 a week ago, according to HedgersEdge.com.
CME feeder cattle finished flat to weak. October futures were guided by the exchange’s feeder cattle index at 165.07 cents. Weak deferred live cattle months and technical selling undercut other feeder cattle contracts.
October feeder cattle closed unchanged at 165.550 cents per lb. November closed at 166.650 cents, down
0.300 cent and January closed at 166.050 cents, down 0.650 cent.
HOGS UP ON DISCOUNT TO CASH
CME lean hog futures climbed to contract highs, partly due to December’s discount to the exchange’s latest hog index that rose to 91.40 cents from 91.25 cents, traders said.
December hogs closed up 0.825 cent at 90.425 cents per lb after earlier posting a contract high of 90.675 cents in electronic trading. February settled 0.875 cent higher at 92.725 cents, after setting a contract high of 92.900 cents.
Investors are closely watching live hogs prices in the Midwest after trading mixed on Friday.
Friday afternoon’s average cash hog price in the western Midwest market was $84.63 per cwt, down $1.22 from Thursday, USDA said. USDA average hog price in the eastern Midwest jumped $3.62 to $71.08 in light volume.
Some packers are coping with a seasonal increase in supplies, while others are short of hogs for next week’s production.
Investors bought deferred hog futures in anticipation of fewer supplies next year as the Porcine Epidemic Diarrhea Virus (PEDv), which is deadly to baby pigs, may spread on U.S. hog farms during cool autumn weather.