U.S. livestock: CME live cattle tumble limit down

Chicago | Reuters –– Chicago Mercantile Exchange live cattle contracts ended Thursday’s session down by their three cents/lb. daily price limit, rattled by lower preliminary cash prices and deteriorating U.S. stock futures amid China’s economic woes, traders said.

February live cattle and April ended at 133.525 cents and 134.3 cents, respectively (all figures US$). Live cattle’s trading limit will be expanded to 4.5 cents on Friday.

“You wonder if futures are leading cash at this point. Ultimately the breakdown in equities is driving the weakness in the cattle market as much as anything else,” said Doane Advisory Services economist Dan Vaught.

Despite a tenth day of wholesale beef price strength that lifted packer margins, packers resisted raising cash cattle bids given futures’ hasty retreat and more animals for sale than last week.

On Thursday morning, a few market-ready (cash) cattle in Nebraska brought $132-$133/cwt, down $1-$3 from last week there, said feedlot sources. They said Kansas and Texas sellers balked at $133 bids for cattle priced over $140.

Last week in the U.S. Plains, cash cattle sold at mostly $133-$136/cwt.

Thursday morning’s wholesale choice beef price rose $2.63/cwt from Wednesday, to $230.66. Select cuts climbed $2.57, to $223.25, based on U.S. Department of Agriculture data.

Funds sold the February contract, and at the same time bought deferred months, before similar moves scheduled on Friday tied to the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI).

Friday is the first of five days of the procedure known as the S+PGSCI “roll.”

Simultaneously, some index funds are expected to buy CME livestock contracts as part of their annual rebalancing of commodity holdings.

Technical selling and live cattle futures losses sank CME feeder cattle by their 4.5-cent/lb. price limit, with January closing at 163.825 cents. The limit will be expanded to 6.75 cents on Friday.

CME lean hogs finished lower on spillover from live cattle futures losses and funds that rolled their February positions into deferred contracts, traders said.

Spot February finished 1.275 cents/lb. lower at 59.55 cents, and April ended down 0.25 cent to 65.6 cents.

Theopolis Waters reports on livestock markets for Reuters from Chicago.

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