U.S. livestock: Cash prices extend CME live cattle losses

Chicago | Reuters — Chicago Mercantile Exchange live cattle fell on Wednesday for a fifth straight session, weighed down by a burdensome supply outlook and cash prices that fell short of expectations, traders said.

A few investors adjusted positions in advance of the U.S. Department of Agriculture’s (USDA) monthly Cattle on Feed report on Friday.

USDA will issue the monthly cold storage report on Thursday at 2 p.m. CT.

April live cattle closed 1.875 cents/lb. lower at 117.7 cents, and June ended 1.625 cents lower at 107.375 (all figures US$).

So far this week, packers paid $125-$126/cwt for market-ready, or cash, cattle in the U.S. Plains including those sold at Wednesday’s Fed Cattle Exchange auction. Last week, the bulk of cattle moved at $126-$128.

Investors believed packers needed cattle because they bought them earlier in the week than usual, even though those cattle sold steady to $1 lower than last week, a trader said.

But slumping futures, mostly due to fund liquidation, encouraged feedlots to resist paying up for animals and scared feedlots into selling them for less money, he said.

Processors may be waiting until more cattle come to market as warmer spring temperatures allow them to put on weight faster, said traders and analysts.

Furthermore, a supply buildup is expected, particularly in the southern U.S. Plains where drought has dried up winter wheat grazing pastures — driving more livestock into feedyards.

CME live cattle futures’ sell-off, and as much as $6/cwt lower cash feeder cattle prices, sank the exchange’s feeder cattle contract to its lowest level in nearly a year.

March feeders ended one cent per pound lower at 136.775 cents.

Hogs mostly firmer

Most hog futures contracts at the CME finished in positive territory after lower cash prices prompted investors to buy deferred months and simultaneously sell April, traders said

Short-covering and bargain buying further supported back-month lean hog futures, they said.

April hogs closed down 0.675 cent/lb. at 62.575 cents. May finished up 0.125 cent at 70.325 cents. June ended 0.475 cent higher at 77.225 cents.

Most packers have enough inventory for the rest of the week, but soon might bid up for supplies to capitalize on their higher margins and the onset of spring grilling, a trader said.

Week-over-week hog weights slipped, which suggests that farmers are sending pigs to market in a timely fashion, a trader said.

— Reporting for Reuters by Theopolis Waters in Chicago.