Chicago Mercantile Exchange (CME) live cattle futures sagged on Thursday in anticipation of steady-to-weaker cash cattle prices as wholesale beef values turned lower, analysts and traders said.
U.S. Department of Agriculture data on Thursday showed wholesale choice beef at $196.32 per hundredweight (cwt), down $1.17 from Wednesday. Select cuts fell 87 cents to $195.13.
Cash cattle bids in the U.S. Plains were at mostly $126-$127/cwt against $130 or higher asking prices, said feedlot sources.
"Some sellers in Texas lowered their price to $128/cwt when April futures slipped below 128 cents per pound, but packers rejected the offer," a feedlot manager said. "It doesn’t look good for cash, but the week’s not over yet."
Given futures’ pullback on Thursday, he and others believe slaughter-ready cattle could bring around $127-$128/cwt — steady to down $1 from last week.
Reduced cattle weights in the wake of recent winter storms suggest ranchers are current in sending their animals to market, which could minimize potential cash price declines.
But processors may curb cash spending and pull from cattle contracted against the April futures contract to protect their margins.
HedgersEdge.com calculated U.S. beef packer margins on Thursday at a positive $5.45 per head versus a positive $2.80 on Wednesday and a positive $5.10 a week ago.
Encouraging U.S. weekly beef export sales results went largely ignored by futures traders. They focused on subsequent wholesale beef and cash prices and the looming meat plant inspector furloughs.
Total U.S. beef sales last week to all destinations were 31,500 tonnes. That was the most since 52,000 tonnes during the week of March 15, 2012, and the fifth largest on record, according to USDA.
The government data on Thursday also showed Japan bought 16,700 tonnes last week, the most since the agency started issuing the weekly data in 2001.
April live cattle closed at 128.05 cents/lb., 0.5 cent lower. June was down 0.3 cent lower at 123.15 cents.
CME feeder cattle slumped to a 7-1/2 month low, dragged down by the lower cattle market.
Spot March feeders settled 0.725 cent/lb. lower at 138.275 cents. Most-actively traded April ended at 141.55 cents, 1.175 cents lower.
Hogs advance despite cash retreat
Hog futures firmed amid hopes for a cash and wholesale pork price rebound despite lower values for both on Thursday, a trader said.
USDA data Thursday showed the average hog price in the most-watched Iowa/Minnesota market at $74.66, down 40 cents from Wednesday.
The average price for pork at wholesale on Thursday fell 90 cents/cwt to $77.54.
"Cash may be close to carving out a seasonal bottom soon as demand for grilling increases," the trader said.
April hogs closed at 80.875 cents/lb., up 0.225 cent. June was 0.45 cent higher, at 90.525 cents.
– Theopolis Waters writes for Reuters from Chicago.