U.S. cattle futures dip with cash, deliveries avoided

U.S. live cattle futures posted modest losses on Monday as investors factored in Friday’s lower cash cattle prices, analysts and traders said.

Late last week, packers paid $124 per hundredweight (cwt) for cattle in Kansas and Nebraska, down $1 from the week before. Live-basis cattle in Texas also fetched $124, compared with $126 to $128 the previous week (all figures US$).

Spot December cattle closed off 0.275 cent per pound at 125.6 cents or down 0.22 per cent. February ended down 0.125 cent, or off 0.1 per cent, to 130.275 cents.

Chicago Mercantile Exchange December live cattle participants also exited the contract to avoid potential deliveries. The contract is set to expire from trading on Dec. 31.

Light fund selling occurred in the February trading month after it slipped beneath the 40-day moving average of 130.34 cents.

Futures traders looked to longer-term market trends based on expectations for tighter cattle numbers, putting aside the current flap over Russia’s testing of U.S. pork and beef for the feed additive ractopamine.

The cattle industry will need robust domestic and foreign demand for beef to support the premiums in the deferred cattle contracts, said John Nalivka, president of Sterling Marketing Inc.

Wholesale choice beef Monday was $194.05/cwt, up $1.10 from Friday, and select cuts were $172.93, up 54 cents, said the U.S. Department of Agriculture.

CME feeder cattle closed higher as corn prices edged lower, improving feedlot demand for younger cattle.

January feeder cattle closed up one cent per pound, or 0.67 per cent, at 149.775 cents. March finished at 152.2 cents, 1.05 cents higher or up 0.69 per cent.

Hogs mixed on spreads

CME hogs posted a two-sided settlement. December slipped on fallen cash hog prices while spreads lifted February futures, said traders and analysts.

Hog futures traders also put new Russian meat import restrictions on the back burner while focusing on weighty market fundamentals.

"The hog market is under extreme pressure, packer margins are red and there is nothing to offset the decline in ham and belly values on the fresh meat side," said Linn Group analyst John Ginzel.

USDA’s Monday data showed the average price for hogs in the eastern Midwest direct region at $78.36/cwt, $3.64 lower than Friday.

HedgersEdge.com put the average pork packer margin for Monday at a negative 90 cents per head, compared with a negative $3.80 on Friday and a negative 60 cents for Dec. 3.

Spot December hog futures settled at 82.15 cents/lb., down 0.15 cent or off 0.18 per cent. Most-actively traded February finished at 83.925 cents, 0.45 cent higher or up 0.54 per cent.

— Theopolis Waters writes for Reuters from Chicago.

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