U.S. livestock: Profit-taking undercuts CME live cattle

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures finished lower on Tuesday, pressured by profit-taking in anticipation of steady-to-lower prices for market-ready or cash cattle this week, traders said.

Plant closures during the U.S. Memorial Day holiday will lessen their need for supplies, they said.

Processors curbed slaughters to avoid spending more for cattle, improve their margins and boost wholesale beef prices.

Last week, cash cattle in Texas and Kansas, on average, traded at $145 per hundredweight (cwt), and $148 in Nebraska (all figures US$).

On Monday and Tuesday, packers processed a combined total of 236,000 head of cattle, 15,000 less than a year ago, said the U.S. Department of Agriculture.

Separate USDA data showed Tuesday morning’s wholesale choice beef price jumped $2.43/cwt from Monday to $229.65. Select cuts climbed $1.52 to $219.06.

Beef packer margins for Tuesday were at a positive $5.40 per head, compared with a negative $13.55 on Monday and a negative $40.85 a week ago, as calculated by industry analytics firm HedgersEdge.com.

The stock market’s nearly one per cent slide may have prompted funds to liquidate some of their long positions in CME livestock futures, a trader said.

Futures may be in store for a volatile session on Wednesday as a few participants begin evening up their accounts ahead of the three-day holiday weekend, he said.

Bargain hunters may be drawn to futures’ discount to last week’s cash cattle prices, the trader added.

June closed 0.65 cent per pound lower at 138.75 cents, and August down 0.45 cent at 140.1.

CME feeder cattle finished mostly lower pressured by profit-taking, but not before posting a record-high earlier in the session as corn prices weakened.

May, which will expire on May 23, closed up 0.575 cent/lb. at 189.05 cents.

August ended down 0.275 cent at 195.925, and September 0.3 cent lower at 197.

Nearby hog months down, others up

CME hog futures settled mixed, pressured by their premiums to the exchange’s hog index at 112.07 cents and profit-taking, traders and analysts said.

They said deferred contracts drew support from speculative buying in anticipation of fewer hogs, pegged to porcine epidemic diarrhea virus (PEDv).

Investors are awaiting USDA’s afternoon direct hog market prices that were unavailable during the morning session.

Traders on Wednesday will again wrestle with futures’ premiums to cash hog prices and production losses from PEDv.

USDA’s weekly Iowa/Minnesota hog weight data will be available on Wednesday.

June finished down 0.775 cent at 118.6 cents, and July 0.5 cent lower to 125.175.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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