Chicago | Reuters — Chicago Mercantile Exchange live cattle futures finished sharply lower on Tuesday on profit-taking following Friday’s rally, traders said.
February closed 1.4 cents per pound lower at 158.6 cents, and April down 2.5 cents at 150.725 cents (all figures US$).
West Coast port slowdowns and disappointing volumes of cattle sold last week, albeit at higher prices, contributed to futures’ losses, said Allendale Inc. chief strategist Rich Nelson.
Last week, market-ready (cash) cattle in the U.S. Plains sold at $162-$163.50 per hundredweight (cwt), compared with $160-$162.50 the prior week, feedlot sources said.
Extremely poor margins limited how many cattle packers bought last week, resulting in more livestock for sale this week, traders and analysts said.
Processors and grocers spent more for supplies as cattle numbers tighten seasonally, they said.
Tuesday morning’s choice wholesale beef price jumped $2/cwt, to $240.22, from Monday. Select cuts rose $1.01, to $234.05, the U.S. Department of Agriculture said.
The day’s beef packer margins were a negative $108.70 per head, compared with a negative $95.10 on Monday and a negative $79.45 per head a week ago, according to Hedgersedge.com.
Fund selling surfaced after April and June drifted below the 20-day moving average of 150.92 cents and 143.94 cents, respectively.
Chart-related selling, profit-taking and live cattle futures’ retreat pulled down CME feeder cattle contracts.
March closed 2.4 cents/lb. lower at 201.45 cents, and April fell 2.525 cents, to 200.725 cents.
Hogs move lower
CME lean hogs settled lower, pressured by weaker cash and wholesale pork prices, traders said.
April closed 2.025 cents/lb. lower at 64 cents, May dropped 1.975 cents, to 74.15 cents and June ended 1.75 cents lower at 78.375 cents.
Tuesday morning’s average cash hog price in Iowa/Minnesota had shed $1.28/cwt from Monday to $55.27, the USDA said.
Slick roads and brutal cold in the Midwest have delayed delivery of hogs to packers, who have sufficient inventories for this week’s production, a trader said.
Packers on Tuesday processed 405,000 hogs, 30,000 fewer than last week, based on USDA data.
West Coast gridlock backed up pork shipments, causing that product to compete directly with meat for domestic use, the trader said.
May and June slipped beneath their respective 10-day moving average of 75.76 cents and 79.48 cents, which triggered fund liquidation and sell stops.
— Theopolis Waters reports on livestock futures markets for Reuters from Chicago.
Tagged cattle futures, CME, hog futures