U.S. livestock: Cash price caution weighs on CME live cattle

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures sagged on Thursday on profit-taking and uncertainty over the price of cash cattle on Friday, traders said.

February live cattle closed down 0.3 cent/lb. at 135.425 cents, and April ended 0.725 cent lower at 134.525 (all figures US$).

Market-ready, or cash, cattle bids in Texas and Kansas were $130 to $132 per cwt versus $136 to $138 asking prices, feedlot sources said. Last week, cash cattle in the U.S. Plains moved at $130 to $135.

Bullish traders are expecting cash prices in parts of the Plains above $134/cwt, given current futures prices and significantly fewer animals for sale than last week.

They also pointed to the prospect that a winter storm forecast to reach the Plains early next week might disrupt livestock production.

The storm may reduce the flow of cattle to market and worsen already muddy conditions in feedlots, said CHS Hedging analyst Steve Wagner.

Contrarians said cash values elsewhere may feel pressure from negative packer margins and seasonally slack beef demand.

The average beef packer margin for Thursday was a negative $4.05 per head, down from a positive $8.70 for Wednesday and a positive $86.20 a week ago, as calculated by HedgersEdge.com.

Market participants await the government’s twice-annual cattle inventory report on Friday.

CME’s January feeder cattle contract, which expired at noon CT, settled at 161.3 cents, up 0.375 cent. It closed nearly in line with the exchange’s feeder cattle index for Jan. 27 at 160.96 cents.

Other feeder cattle months were pressured by live cattle market selling. March feeders closed down 0.5 cent/lb. at 159.425 cents, and April ended 0.65 cent higher at 158.95.

Weak hog futures settlement

CME lean hogs’ sizeable premiums to the exchange’s hog index discouraged buyers, traders said.

Spot February finished down 0.075 cent/lb. at 65.3 cents, and April ended 0.775 cent lower at 69.7.

The day’s firm cash and wholesale pork values limited February future’s losses.

Cash hogs in the Midwest Thursday morning sold as much as $1.50/cwt higher as packers gathered supplies that have declined seasonally, dealers said.

The morning wholesale pork price on Thursday was up 19 cents/cwt from Wednesday to $75.96, USDA said.

Some grocers may be stocking up on pork ahead of potential weather-related supply shortages next week, a trader said.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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