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LIVESTOCK-U.S. live cattle futures slump on profit taking

Chicago Mercantile Exchange live cattle futures fell on Wednesday, pressured by profit taking after gaining in seven of the past nine sessions, traders and analysts said.

Prior to Wednesday, futures climbed after tight supplies last week drove prices for slaughter-ready cattle to a record-high $132 per hundredweight (cwt).

And packers raised the price of beef sold to retailers in an effort to counter the general shortage of supplies and recover lost margins.

Wednesday morning’s wholesale choice beef price was $205.31 per cwt, which was $1.07 higher than on Tuesday and eclipsed the most recent high of $205.29 on June 4. Select cuts jumped $1.94 to $190.06.

Investors adjusted positions before the U.S. Department of Agriculture’s monthly cattle-on-feed report on Thursday.

Analysts polled by Reuters said U.S. feedlot cattle placements likely increased 1.2 per cent in September from a year earlier as lower-cost corn encouraged feedlots to buy young cattle to fatten.

U.S. drugmaker Merck & Co plans to resume sales of the controversial Zilmax animal feed additive in the United States and Canada after it completes an audit of how the product is used, a spokeswoman said on Tuesday.

Zilmax was credited for adding upwards of 30 pounds of beef on cattle during their last few weeks in feedlots.

“It has nothing to do with December cattle futures. And it may not make that much of a difference given cattle weights are down only 5 pounds from a year ago without Zilmax,” said Oak Investment Group President Joe Ocrant.

Funds that trade CME live cattle and hogs sold December futures and bought deferred months. They moved long positions further out prior to similar moves expected next week by followers of the Goldman Sachs Commodity Index (S&PGSCI).

Funds that follow the S&PGSCI will shift their December long positions mainly into February and April. That shifting will be for five days starting Nov. 7.

October live cattle futures, which will expire on Thursday, closed down 0.050 cent at 133.350 cents per lb, with December 1.150 cents lower at 133.125 cents.

Sell-stops and CME live cattle losses pulled down feeder cattle futures.

October feeder cattle, which will also expire on Thursday, finished at 165.225 cents per lb, down 0.200 cent. November ended at 164.950 cents, 1.800 cents lower.

Hogs fall with pork prices

After climbing to contract highs for a fourth consecutive session, CME hogs retreated, with investors pocketing profit as wholesale pork prices turned lower, a trader said.

Processors discounted their costs of fresh pork at wholesale to generate buying interest from grocers, he said.

“We’re certainly seeing some strong drives to push up wholesale beef, and the pork side is just collapsing,” Linn Group analyst John Ginzel said.

Wednesday morning’s wholesale pork price was at $92.48 per hundredweight (cwt), down $1.56 from Tuesday, according to the USDA.

Fund liquidation undercut deferred hog contracts. Those trading months recently surged on speculation that the spread on U.S. hog farms of the Porcine Epidemic Diarrhea virus (PEDv), which is fatal to piglets, might reduce supplies in the months ahead.

December hogs ended 0.950 cent per lb lower at
90.400 cents, sliding from an earlier contract high of 92.300 cents in electronic trading.

February closed 1.000 cent per lb lower at 93.100 cents, after posting a fresh contract high of 94.900 cents.

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