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U.S. livestock: CME live cattle hit seven-week low in bearish fundamentals

Feeder cattle close lower; hogs post monthly lows

(Photo courtesy Canada Beef Inc.)

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Friday sank to their lowest point since mid-October after the steep drop in cash and wholesale beef prices, traders said.

December ended down two cents per pound at 164.45 cents, and February 2.1 cents lower at 164.875 cents (all figures US$).

This week, market-ready (cash) cattle in Kansas and Nebraska moved at $166 to $168 per hundredweight (cwt), down as much as $6 from last week, said feedlot sources.

Friday morning’s choice wholesale beef price slid 55 cents/cwt from Thursday to $253.87. Select fell $2.48, to $237.78, the U.S. Department of Agriculture said.

Pushback by grocers against high beef costs, and deeply red packer margins, hurt cash prices, an analyst said.

Beef packer margins for Friday were a negative $132 per head, compared with a negative $120.55 on Thursday, according to Colorado-based analytics firm HedgersEdge.com.

The dollar’s surge contributed to CME’s livestock market sell-off because of its implications for U.S. meat exports.

Nearby live cattle contracts sank further after drifting below their Dec. 3 lows, which tripped sell stops.

“Some people are already looking at this week’s heavy losses as a buying opportunity, but timing is everything,” a trader said.

Fund liquidation, higher-priced corn and CME live cattle future’s retreat pressured the exchange’s feeder cattle contracts.

January ended 1.075 cents/lb. lower at 234.875 cents, and March off 0.825 cent at 231.225 cents.

Hog futures down

CME lean hogs extended losses in response to weaker wholesale pork values and in anticipation of softer cash prices, traders said.

USDA data showed Friday morning’s wholesale pork price fell 88 cents/cwt from Thursday to $92.74.

The morning’s average cash hog price in the Iowa/Minnesota market gained 29 cents/cwt to $84.71 in light volume.

Traders waited for the government’s afternoon cash price information because of more packer participation than the morning data.

Some packers have inventory needs filled for early next week when moderating temperatures may stem the seasonal hog weight declines, an analyst said.

Heavier hogs could make more pork available to grocers looking to feature beef in the weeks ahead, he said.

December closed 1.025 cents/lb. lower at 86.6 cents after earlier hitting a one-month low. February closed at 85.625 cents, one cent lower and at one point sank to a 3 1/2-month bottom.

— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.

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