Chicago | Reuters –– Chicago Mercantile Exchange live cattle contracts slid for an eighth day in a row on Wednesday as long liquidation continued, said traders.
April live cattle closed 1.025 cents/lb. lower at 126.3 cents, and June ended down 1.3 cents/lb. at 117.275 cents (all figures US$). Both contracts earlier sank to four-month lows.
In a trading strategy known as bear spreading, investors periodically sold April futures and bought deferred months in anticipation of no better than steady cash prices by Friday, traders said.
Last week, packers paid $133-$136/cwt for market-ready, or cash, cattle in the U.S. Plains.
A trader said packers might avoid paying more for supplies by curbing slaughter rates to conserve their margins and ignite retail beef buying interest.
The morning’s wholesale choice beef price was up 27 cents/cwt from Tuesday to $222.95. Select cuts gained 25 cents, to $214.19, the U.S. Department of Agriculture said.
The average beef packer margin was estimated at positive $12.05 per head, down from a positive $30.05 on Tuesday and up from a negative $24.25 a week earlier, as calculated by HedgersEdge.com.
Sharply higher corn futures prices and steep drop in cash feeder cattle returns dragged CME feeder cattle contracts lower. April closed 0.775 cent/lb. lower at 149.4 cents.
Hog market closes higher
Technical and speculative buying, along with the five-day rally in wholesale pork prices, sent CME lean hogs higher for a fifth consecutive session, traders said.
Thinly traded May ended 1.025 cents/lb. higher at 77.225 cents and above the 40-day moving average of 77.06 cents. Most-active June finished up 0.675 cent, to 79.6 cents.
Wednesday morning’s wholesale pork price was at $81.36/cwt, up 40 cents from Tuesday and $3.23 higher than a week ago, based on USDA data.
Investors were tracking the morning’s cash prices that were firm according to Midwest hog dealers, but lower in light volume based on USDA’s direct hog market data.
This week’s hog slaughter is expected to be huge, but animal weights have come down and fewer hogs are expected heading into May, an Iowa hog dealer said.
“The most important component to a stronger cash market is the product strength coming from good demand,” he said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged cattle futures, closing markets, CME, feeder cattle, hog futures, lean hogs, live cattle