U.S. livestock: CME live cattle ease ahead of cash prices

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures ended lower on Tuesday after traders sold the February contract and bought deferred months while awaiting cash prices later this week, traders said.

On Tuesday, packers in Texas and Kansas bid $132/cwt for market-ready, or cash, cattle against sellers who asked $138, said feedlot sources (all figures US$). Last week, cash cattle in the U.S. Plains moved at mostly $136.

The cash market is vulnerable after trading $136 last week when people had anticipated $140 to $142 sales, said KIS Futures vice-president Lane Broadbent.

Some market participants viewed this week’s early cash bids as a sign that packers might be short on inventory.

Others said a few processors may avoid spending more for cattle after taking delivery of animals that had been delayed as a result of last week’s blizzard in the central Plains.

Also, a few packers reduced slaughter rates to realign their margins and shore up sagging wholesale beef prices.

The morning’s wholesale choice beef price slipped five cents/cwt from Monday, to $218.76. Select cuts had fallen $1.51, to $215.07, the U.S. Department of Agriculture said.

Tuesday’s average beef packer margin was a negative $33.95 per head, up from a negative $42.80 for Monday and down from a negative $27.75 a week ago, as calculated by HedgersEdge.com.

February live cattle closed 1.65 cents/lb. lower at 131.4 cents, and April ended down 0.25 cent, to 131.15 cents.

Soft cash feeder cattle prices weakened the exchange’s March feeder cattle contract, with April supported by its discount to CME’s feeder cattle index for Feb. 8 at 159.76 cents.

March feeders finished down 0.325 cent/lb. to 149 cents, and April gained 0.125 cent, to 149.1 cents.

Weak hog futures settlement

Cash price uncertainty, and February futures tracking the exchange’s hog index for Feb. 5 at 64.62 cents, pressured CME lean hog contracts, traders said.

Spot February ended down 0.175 cent, to 64.85, and April slipped 0.1 cent, to 69.625 cents.

On Tuesday morning, cash hog prices in the Midwest held steady as packers filled inventories for this week’s production, said dealers.

The uptick in wholesale pork values, partly due to ham buying for Easter’s early arrival this year, limited futures losses, said traders.

The morning wholesale pork price on Tuesday jumped $1.15/cwt from Monday, to $78.11, USDA said.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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