U.S. feeder cattle extend losses as corn climbs

Live cattle mixed amid cash price uncertainty

Chicago Mercantile Exchange (CME) feeder cattle on Monday fell for a sixth straight day, pressured by corn prices which have risen in the last seven trading sessions, analysts and traders said.

The corn rally means feedlots will be paying more to fatten their cattle and it reduces demand for replacement animals, one trader said.

Lower prices for feeder cattle in the most-watched Oklahoma City cash market also weighed on futures.

Spot January fell below the 100-day moving average of 149.17 cents, prompting more liquidation (all figures US$).

January feeder cattle futures ended 1.125 cents per pound lower, at 148.325 cents. Most-actively traded March was 1.05 cents lower at 150.375 cents.

Live cattle await cash

Live cattle futures settled mixed amid uncertainty about cash cattle price direction for this week, traders and analysts said.

Spot February closed at 130.425 cents per pound, up 0.075 cent. April live cattle ended down 0.325 cent at 134.425 cents.

Cash bids in Kansas surfaced at $123 per hundredweight (cwt), compared with mostly $125 sales last week, a feedlot manager said. There were no bids or asking prices reported by feedlot sources elsewhere in the state or the U.S. Plains.

The U.S. Department of Agriculture put last week’s overall cash cattle trade at $125 to $128, which was steady to down $3 from the previous week.

Those with bullish market leanings expect cash cattle to trade roughly steady with last week based on fewer animals available for sale at some feedlots.

Market bears contend packers bought a small number of cattle in recent weeks which created a backlog of animals at other feedyards.

Also, processors may again control cash spending to recover lost margins and prop up wholesale beef prices.

"Packers can stretch available supplies by slowing down the rate of marketings. The problem is beef is going nowhere," CattleHedging.com analyst Elaine Johnson said.

HedgersEdge.com put the average beef packer margin for Tuesday at a negative $45.85 per head, compared with a negative $62.80 on Monday and a negative $64.20 on Jan. 8.

The price for wholesale choice beef Tuesday morning was $194/cwt, down nine cents from Monday; select cuts slipped 34 cents to $184.42, according to USDA.

Hogs mixed on spreads

Expectations of higher cash hog prices underpinned CME February hogs while profit-taking weighed on remaining contracts, traders said.

Spot February hogs settled up 0.025 cent/lb. at 85.25 cents. Most-active April ended at 87.6 cents, down 0.25 cent.

"Packers need hogs for this week’s kill. But paying more for supplies without help from the product side would surely hurt their margins," one trader said.

The government Monday morning showed the average hog price in the eastern Midwest hog market 62 cents/cwt lower at $78.52. Hog prices elsewhere in the Midwest region were unavailable.

The average pork packer margin for Tuesday was at a negative $3.30 per head, compared with a negative $1.30 on Monday and a negative $4.65 on Jan. 8, according to HedgersEdge.com.

– Theopolis Waters writes for Reuters from Chicago.

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