Chicago | Reuters –– Chicago Mercantile Exchange live cattle fell on Wednesday for the first time in seven days as investors took profits, but sharply higher wholesale beef values minimized losses, traders said.
April closed down 0.275 cent per pound, to 161.725 cents, and June 0.675 cent lower at 152.375 cents (all figures US$).
The morning’s choice wholesale beef price surged $3.55 per hundredweight (cwt) from Tuesday, to $250.38. Select cuts climbed $2.79 to $247.57, the U.S. Department of Agriculture said.
Grocers competed for beef after packers trimmed production to improve margins and rein in cash spending, traders and analysts said.
From Monday to Wednesday, packers processed 16,000 fewer cattle than last week at 311,000 head, according to USDA data.
So far, there is no word from packers after feedlots in Kansas and Texas priced market-ready (cash) cattle up to $167/cwt, said industry sources. Last week, cash cattle in the U.S. Plains traded at $163-$165.
Strong cash feeder cattle prices underpinned the CME feeder cattle March contract that will expire on Thursday.
Remaining feeder cattle months were pressured by sell stops and live cattle futures weakness.
March closed up 0.525 cent/lb. to 217.7 cents, April down 1.675 cents, to 217.25 cents, and May 1.9 cents lower at 215.975 cents.
Nearby hogs firmer, others softer
CME lean hogs April and May contracts settled higher after a choppy session, supported by short-covering and uptick in cash prices, traders said.
The morning’s average hog price in Iowa/Minnesota was $56.44 per cwt, up 11 cents from Tuesday, according to USDA.
Declining hog weights from last year’s highs suggest supplies may be tightening which might improve cash prices, but help is needed from the product side, a trader said.
Separate government data showed the morning’s wholesale pork price had dropped 79 cents per cwt from Tuesday to $67.02.
Deferred-month investors exercised caution ahead or Friday’s USDA quarterly hog report.
“I expect the hogs (futures) to go into this hog report not far from their contract lows. I think it’s going to be a pretty negative supply report,” said Archer Financial Services broker Dennis Smith.
April closed 1.225 cents/lb. higher at 59.825 cents, and May up 0.375 cent to 66.525 cents. June finished down 0.075 cent at 74.6 cents and July 0.1 cent weaker at 75.15 cents.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.