U.S. livestock: CME live cattle end lower on weaker cash prices

Chicago Mercantile Exchange (CME) live cattle futures ended lower on Thursday dragged down by weaker cash cattle trade, analysts and traders said.

U.S. Plains cash cattle traded at $131 per hundredweight (cwt), $1 lower than the previous week, feedlot sources said (all figures US$).

There were more cattle for sale this week due to a carryover from the previous week which pressured prices. Additionally, with beef packer margins firmly in the red, the plants have a slower production schedule in an effort to improve the negative margins, analysts said.

On Thursday, HedgersEdge reported beef packer margins at a negative $29.30 per head, down from a negative $26.05 on Wednesday and negative $22.35 a week ago.

“The lower cash cattle trade was not unexpected. With a slowed kill and larger cattle supply this week, I’m not surprised,” said Doug Houghton, commodities analyst at Brock Associates.

The U.S. Department of Agriculture’s weekly export report on Thursday morning showed U.S. beef sales last week reduced by 18,500 tonnes from 55,500 tonnes the previous week.

The 18,500 tonnes reduction was an adjustment to the prior week’s data that reflected the lapse of export information during the partial U.S. government shutdown in early October, a USDA official said.

“The revision takes away some demand that the market thought was there,” Houghton said.

December settled down 0.35 cent at 131.675 cents per pound, and February closed at 133.55 cents, down 0.3505 cent.

CME feeder cattle futures followed live cattle futures lower.

November closed down 0.225 cents/lb. at 164.625 cents, and January ended at 165.125 cents, 0.425 cents lower.

Strong pork prices lend support

CME hog futures ended firmer supported by higher wholesale pork prices, traders said.

Wholesale pork prices jumped by $2.57/cwt to $96.15 on Thursday morning. Hams reversed its downward price trend of the last two days to gain by $3.08/cwt, to $89.55.

Funds periodically sold their December positions and bought deferred contracts while conducting a strategy called a “roll.”

Funds that use the Standard + Poor’s Goldman Sachs Commodity Index (S+PGSCI) shifted, or rolled, their CME live cattle and hogs December long positions into February and April. Thursday was the first of five days for the process.

Solid weekly pork exports also lent support to U.S. hog futures, analysts said. USDA reported early on Thursday the U.S. exported 12,700 tonnes of pork.

Concerns about the spread of porcine epidemic diarrhea virus (PEDv), a fatal disease for baby pigs, also underpinned deferred month contracts.

December hogs ended up 0.2 cent at 87.55 cents/lb. February hogs ended up 0.525 cent at 91.4 cents.

— Meredith Davis reports on U.S. ag commodities for Reuters from Chicago.