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U.S. livestock: Lower cash prices pressure CME live cattle

Chicago Mercantile Exchange live cattle on Wednesday closed lower in response to lower prices in light cash trading, traders and analysts said.

Wednesday morning, a few cash cattle traded in Nebraska at $129 per hundredweight (cwt), down $1 to $2 from a week ago, feedlot sources said (all figures US$). Cash bids elsewhere in the state stood at $128 against mostly $132 asking prices, they said.

No cash bids or asking prices in Texas and Kansas were reported by feedlot sources.

CME investors expect the remaining cash cattle in the Plains to trade steady-to-lower based on recent futures’ losses and poor packer margins. Some price pressure was expected as beef plants will be closed for the Christmas and New Year’s holidays, reducing the number of cattle they will need.

Investors adjusted positions before the U.S. Department of Agriculture’s monthly cattle-on-feed report on Friday.

Most analysts polled by Reuters predicted USDA’s data will show placements increased marginally in November as cheaper corn encouraged feedlots to bring in more young cattle to fatten.

December live cattle finished 0.8 lower at 130.95 cents per pound, and February ended at 132.35 cents, down 0.625 cent

The losses in CME live cattle and technical selling dragged down feeder cattle futures.

Feeder cattle for January closed at 166.05 cents, down 1.1 cents, and March ended down 0.525 cent at 165.85 cents.

Short-covering lifts hog futures

Chicago Mercantile Exchange hog futures climbed Wednesday on short-covering and speculative buying, traders said.

Speculative traders bought spring and summer 2014 hog contracts in the belief that the spread of the porcine epidemic diarrhea virus (PEDv), which is deadly to baby pigs, will reduce hog production during that period.

“There is concern that there may be supply problems in the future and prices on the board are reflecting that,” said independent hog future trader James Burns.

CME hogs slipped from session highs in anticipation of lower trending cash prices as packers throttle back operations for at least on day next week for Christmas.

Wednesday afternoon’s USDA data showed the average price of hogs in the closely watched Iowa/Minnesota market at $76.79/cwt, $1.43 lower than Tuesday.

Investors are closely watching wholesale pork sales, amid anticipation that ham sales will slow as seasonal buying winds down.

The afternoon’s wholesale pork price dropped $1.98/cwt to $89.05, pressured by a $5.64 plunge in hams, according to USDA.

February hogs closed 0.7 cent/lb. higher at 86.35 cents, and April hogs finished up 0.75 cent at 91.175 cents.

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

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