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

Chicago/Reuters – Chicago Mercantile Exchange live cattle closed down slightly on Wednesday as investors await this week’s cash sales, traders said.

August closed down 0.125 cent per lb at 144.925 cents, and October 0.325 cent lower at 146.475 cents.

Bids for market-ready, or cash, cattle in Kansas and Texas were at $143 per cwt versus $148 asking prices, feedlot sources said. Nebraska bids stood at $144 to $145 with no response from sellers, they said.

Last week, cash cattle in the U.S. Plains fetched $145 to $146 per cwt.

Improved packer profit margins, and sentiment that wholesale beef prices may have bottomed out seasonally, encouraged futures buyers who expect cash to trade the same or better than a week ago.

Beef processor margins for Wednesday were at a negative $26.56 per head, compared with a negative $30.65 on Tuesday, as calculated by HedgersEdge.com.

The morning’s wholesale choice beef price was at $232.67 per cwt, 52 cents higher than on Tuesday. Select cuts were up 27 cents to $229.14, the U.S. Department of Agriculture said.

But packers have curtailed operations to grow their margins, control cash spending and drive up wholesale beef costs.

“The cattle industry has been so focused on numbers that they’ve forgot about demand. And, if you can’t move it (beef) it doesn’t matter how many cattle you have,” said Wagnon Commodities owner Lynn Wagnon.

CME feeder cattle drew support from buy stops and lower corn prices.

August closed 0.225 cent per lb higher at 211.475.

Hog futures advance

CME lean hogs retained some of their early-session gains following Tuesday’s cash and wholesale pork price spikes that faded on Wednesday, traders said.

August ended up 0.375 cent per lb at 79.850 cents, and October 1.025 cents higher at 66.075 cents.

USDA reported Wednesday morning’s average cash hog price in Iowa/Minnesota had slumped $1.51 per cwt from Tuesday in light volume to $74.64.

Government data showed the wholesale pork price on Wednesday morning at $84.70 per cwt, $1.51 lower than on Tuesday, which traders attributed to sufficient supplies.

“We keep hearing how tight hog numbers are, but you can’t tell based on kills so far this week,” a trader said.

From Monday to Wednesday, packers processed 1.262 million hogs, 35,000 more than last week.

October was further supported by its huge discount to the exchange’s hog index for July 27 at 78.36 cents, said traders.

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