Chicago | Reuters — Chicago Mercantile Exchange live cattle futures closed lower on Monday, after funds sold, or rolled, their April long positions and simultaneously bought deferred months, traders said.
Funds trading in CME’s live cattle and hog markets shifted June long positions further back in a procedure known as the “roll” by followers of the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).
Monday was the first of five days for the S+PGSCI roll process.
Futures also retreated following Friday’s cash prices that came in shy of early-week expectations. Packers relied on cattle bought in advance for delivery last week while trying to realign their poor profits by keeping cash bids low.
A week ago, packers in the U.S. Plains paid mostly $136/cwt for cash cattle that the week before sold at $133 to $137, said feedlot sources (all figures US$).
Monday’s average beef packer margin was a negative $50.50 per head, up from a negative $55.90 on Friday and a negative $39.55 last week, as calculated by HedgersEdge.com.
Retailers may be purchasing beef in advance of tighter supplies and spring grilling promotions after the Easter holiday, a trader said.
The afternoon’s wholesale choice beef price was up 45 cents/cwt from Friday, to $221.42. Select cuts were $1.75 higher, at $213.74, the U.S. Department of Agriculture said.
April and June live cattle ended down 0.4 cents/lb. to 135.95 and 126.075 cents, respectively.
CME feeder cattle felt pressure from live cattle market weakness. March closed 0.55 cent/lb. lower at 157.95 cents.
Weak hog futures close
Fund rolling pressured the April contract but minimized back month losses, traders said.
April closed 0.75 cent/lb. lower at 70.05 cents, May ended 0.175 cent lower at 77.15 cents and June finished down 0.025 cent, to 81.2.
Also, the day’s firm cash and wholesale pork values provided underlying futures support.
Monday afternoon’s average cash hog price in Iowa/Minnesota rose 55 cents/cwt from Friday, to $63.30, the USDA said.
The afternoon wholesale pork price on Monday was up 62 cents/cwt from Friday, to $75.84, based on government data.
Decent wholesale product demand and highly profitable margins are encouraging packers to maintain at least steady cash bids, said Midwest hog dealers.
HedgersEdge.com estimated Monday’s average pork packer margin at $21.25 per head, up from $20.95 on Friday and $17.75 last week, as calculated by HedgersEdge.com.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.