Chicago Mercantile Exchange live cattle futures on Friday gained in quiet trading, partly supported by this week’s higher cash prices, traders said.
And investors bought CME live cattle with the view that Thursday’s technical-related market selloff was overdone.
“The market was extremely quiet with people not knowing which direction to go after yesterday’s wild downward reversal,” said R.J. O’Brien floor manager Jim Brooks.
This week, cash-basis cattle traded at mostly $129 to $130 per hundredweight (cwt), up $1 to $2 higher from last week (all figures US$). It flirted with the $130 all-time high for the week ended March 2, 2012, feedlot sources said.
Less available cattle and recently improved wholesale beef prices convinced packers to raise bids for supplies. Those higher cash prices pressured packer margins.
Friday afternoon’s average wholesale choice beef price, or cutout, was at $196.29/cwt, up 26 cents from Thursday. Select cuts fell $1.74 to $179.98.
Estimated margins for U.S. beef packers on Friday were a negative $44.30 per head, compared with a negative $46.70 on Thursday and a negative $37.40 a week ago, according to HedgersEdge.com.
“I don’t think futures will get much higher until they find out if packers can sell the meat,” K+S Financials analyst Jack Salzsieder said.
The U.S. Department of Agriculture released its weekly beef and pork export results on Friday at 11 a.m. CT.
That data showed U.S. beef sales last week at 12,800 tonnes, mostly to Japan. It compares with 9,300 tonnes on Sept. 26, the last time USDA issued the report.
USDA on Thursday said it will delay its monthly cattle-on-feed report to Oct. 31 from Friday, Oct. 18.
Most analysts polled by Reuters for the cattle report said feedlot placements last month likely increased 1.6 per cent from a year earlier as corn costs declined.
Live cattle October closed 0.725 cent per pound higher at 129.875 cents. December finished at 132.025 cents, up 0.25 cent and in line with the 20-day moving average of 132.03
CME feeder cattle ended mixed, with the higher live cattle market offering support while pressured by profit-taking.
October closed at 166.075 cents/lb., 0.225 cent higher, while November ended down 0.05 cent, to 166.85 cents.
Hogs drop on cash jitters
Investors sold CME hogs in response to lower cash prices, traders said.
The government Friday afternoon showed the average price of hogs in the most-watched Iowa/Minnesota market at $90.83/cwt, down 57 cents from Thursday.
More hogs are available as cool fall temperatures and newly-harvested corn allows hogs to quickly put on weight while pumping more pork into the retail pipeline.
That was not the case last summer when drought pushed feed costs to all-time highs, which forced producers to grow hogs to lighter weight or downsize their herds.
USDA data showed the wholesale pork price, or cutout, Friday afternoon at $94.30/cwt, $1.58 lower than on Thursday.
USDA on Friday reported U.S. pork export sales last week at 21,800 tonnes, mainly to Mexico, compared with 9,500 tonnes the last time the data was available on Sept. 26.
Friday’s pork export outcome was the second highest since USDA began issuing the data on April 4 when it was 48,400 tonnes.
“It’s hard for me to get excited about that pork export number when I’ve not seen it for two weeks,” a trader said regarding the lapse in USDA information due to the government shutdown.
December hogs closed 0.5 cent/lb. lower at 87.95 cents and February finished at 90.05 cents, down 0.475 cent.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.