Your Reading List

LIVESTOCK-U.S. cattle futures dip on belief beef peak scaled

* Seasonal highs may be in for cattle
    * Position-squaring before Friday's cattle-on-feed
    * Hogs turn own as packer profits erode

    By Sam Nelson
    CHICAGO, May 15 (Reuters) - Chicago Mercantile Exchange
(CME) live cattle futures fell on Wednesday on trade ideas that
the top of cash markets are set following a series of gains to
record highs in the wholesale beef market, traders and analysts
said.
    "It's a wait-and-see game to see what cash does. Beef is at
record highs, but some people are afraid it's getting a bit
toppy given the seasonal supply buildup and grocers getting
	
close to having all the product they need for Memorial Day," a trader said. Wholesale beef carcass prices leaped $2.09 per hundredweight to a record high of $208.18 per hundredweight on Wednesday on lower supplies and increased demand before the traditional U.S. Memorial Day grilling season on the final weekend of May. CME live cattle futures for June delivery were down 0.775 cent per lb at 120.000 cents per lb. August cattle were down 0.550 cent per lb at 119.850 cents per lb. "Part of the day's losses can be tied to funds pressing the market," said Don Roose, analyst for U.S. Commodities in Des Moines, Iowa. "But declining open interest suggests investors who were caught long the market are liquidating those positions," he said. Some position-squaring and long-liquidation was noted ahead of the release at 2:00 p.m. CDT (1900 GMT) of the U.S. Department of Agriculture's May cattle on feed report. An average of analysts' estimated in a Reuters poll pegged the number on feed on May 1 at 10.677 million, down nearly 4 percent from a year ago. The number of young cattle placed in feedlots in April was pegged at 1.720 million, up 13.1 percent from a year ago.
Analysts said the number placed on feed jumped from a year ago due to lower costs to feed cattle and higher cash cattle prices. Cattle futures found some underpinning from fairly lucrative and improving profits for beef packers. Estimated margins for U.S. beef packing companies were a positive $51.15 per head on Wednesday, up from $40.85 per head on Tuesday and up from a negative $9.80 per head a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC. Cash bids in the U.S. Plains surfaced at $124 per hundredweight against $127-128 asking prices from feedlots. Cash-basis cattle last week moved at mostly $126 to $127 per hundredweight. Feeder cattle futures also turned down in step with the slip in cattle and on profit-taking and liquidation ahead of Friday's cattle on feed report. CME May feeder cattle futures were down 0.425 cent per lb at 135.075 cents per lb. August was down 1.125 at 145.300. Lean hog futures turned down on waning packer profit margins that led to prospects packers would begin cutting slaughter rates and lower their bid price for live animals destined for slaughter. Lean hog futures for June delivery were down 0.675 cent per lb at 91.925 cents per lb. July hogs were down
0.550 at 91.850. "The hog market had a seasonal push up, usually because of a drop in supplies and increased cutout due to pent up grilling demand. But there is concern negative packer margins could result in lower cash prices at some point," said Roose. Estimated profit margins for U.S. pork packing companies on Wednesday were a negative $6.30 per head, down from a negative $5.55 on Tuesday but up from a minus $11.20 a week ago, according to Denver-based livestock marketing advisory service HedgersEdge.com LLC. Wholesale pork carcasses were up 91 cents per hundredweight on Wednesday at $92.20 per hundredweight and above the five-day average at $90.74. U.S. Midwest cash hogs were steady and some packers cut back on kill hours as most had supplies to cover plant outages ahead of the U.S. Memorial Day holiday, dealers said. (Additional reporting by Theopolis Waters and Alyce Hinton in Chicago; Editing by Grant McCool)

About the author

Comments

explore

Stories from our other publications