Chicago | Reuters — Chicago Mercantile Exchange live cattle ended lower on Friday, pressured by profit-taking and a wholesale beef price reversal after Thursday’s spike, traders said.
Futures remained undervalued based on this week’s cash price expectations, which stirred late-session buying that freed contracts from session lows.
June closed down 0.4 cent per pound, to 152.825 cents, and August 0.875 cent lower at 150.575 cents (all figures US$).
Friday’s wholesale choice beef (cutout) price sank $3.31 per hundredweight (cwt) from Thursday, to $245.17. Select cuts dropped $1.68, to $238.83, the U.S. Department of Agriculture said.
“Ultimately the weakness in product definitely has the market on edge,” said Top Third Ag Marketing analyst Craig VanDyke.
Seasonally soft beef demand was further weakened by prolonged rain in parts of the country, discouraging grilling, a trader said.
Packers temporarily trimmed slaughters to halt their sliding margins, bridle cash spending and drive up beef cutout values, he said.
USDA estimated Friday’s cattle slaughter at 101,000 head, 14,000 less than last week.
Packers in Kansas and Nebraska bid $154-$155/cwt for market-ready (cash) cattle against $162-$163 asking prices, feedlot sources said. Last week, cash cattle moved at mostly $160.
Friday’s beef packer margins were a negative $71.50 per head, compared with a negative $65.80 on Thursday and a positive $13.85 last week, as calculated by HedgersEdge.com.
Traders sold June before the first notice day for cattle deliveries against the contract on Monday and ahead of its expiration on June 30.
CME feeder cattle mimicked live cattle futures’ initial drop and later settlement off session bottoms.
August ended 0.675 cent/lb. lower at 221.9 cents.
June hogs down, others up
CME lean hogs closed mostly firm on short-covering after traders bought deferred months and sold June in response to bearish market fundamentals, traders said.
June was further pressured by investors who exited the contract in advance of its June 12 expiration, they said.
June closed 0.525 cent/lb. lower at 81.675 cents, July up 0.525 cent at 81.125 cents and August ended 1.2 cents higher at 80.825 cents.
Cash hogs in the Midwest on Friday morning traded mostly 50 cents/cwt lower than Thursday after packers bought enough of them for early next week, regional hog dealers said.
The government reported Friday morning’s wholesale pork price at $85.41/cwt, $1.45 lower than on Thursday.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.Tagged beef cutout, beef prices, cattle futures, CME, hog futures