Chicago Mercantile Exchange (CME) live cattle futures closed lower on Wednesday, pressured by weak cash cattle prices, traders and analysts said.
Cash cattle traded in Texas and Kansas at $127 per hundredweight (cwt), down $1 from a week ago, feedlot sources said (all sources US$).
“We held out for $128 but a few guys got spooked when the board (futures) broke hard,” a Texas feedlot manager said.
Futures investors initially believed that fewer cattle this week versus last week would underpin cash prices — but poor beef packer margins limited what they would pay.
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U.S. beef packer margins on Wednesday were estimated at a negative $47.20 per head versus a negative $51.55 on Tuesday and a negative $27.75 a week ago, according to HedgersEdge.com
While a spring snowstorm in parts of the Midwest was viewed as supportive for cash prices as it setback cattle and hog growth and delayed their movement to meat plants.
On the other hand snow, rain and cold weather postponed the start of the spring grilling season, which hurt meat sales.
On Wednesday, the U.S. Department of Agriculture reported the average wholesale choice beef price was down 46 cents to $190.95 per hundredweight (cwt); select cuts fell $1.45 to $185.57.
CME live cattle losses increased when futures fell below this week’s lows, triggering sell stops. Deferred-month live cattle contracts posted fresh lows as funds liquidated long positions.
Spot April live cattle closed 1.45 cents per pound lower at 125.275 cents. Most-actively traded June ended 1.7 cents lower at 120 cents. June set a contract low of 119.9 cents in after-hours trading.
CME feeder cattle traded sharply lower in sympathy with lower live cattle futures and on fund liquidation.
April feeder cattle settled down 2.125 cents at 140.5 cents/lb. and May closed at 142.325 cents, down 2.425 cents.
USDA’s World Agriculture Supply and Demand Estimates (WASDE) grain data on Wednesday garnered mixed reviews by livestock traders.
World ending stocks for corn, the main ingredient in livestock feed, were larger than expected while U.S. corn ending stocks came in below trade estimates.
April hogs rise, others fall
CME spot April hogs traded nearly in line with the exchange’s lean hog index which was at 80.86 cents.
April hogs ended 0.5 cent higher at 81.225 cents/lb. The contract will expire on Friday (April 12).
Despite higher cash hog prices tied to storm-reduced supplies, the premium of futures to cash weighed on remaining contracts, analysts and traders said.
June hogs slipped 0.35 cent to 89.5 cents and July closed down 0.55 cent at 89.45 cents.
USDA estimated Wednesday’s hog slaughter at 395,000 head, down 30,000 from a week earlier and 23,000 fewer than a year earlier.
The average hog price in the most-watched Iowa/Minnesota market was $82.03/cwt, up $1.96 from Tuesday, USDA said.
“Packers probably raised bids to lure hogs off farms hit hardest by bad weather around the Iowa and Minnesota area,” a trader said.
In its monthly forecast on Wednesday, the government raised its 2013 U.S. pork production estimate by 130 million lbs. and lowered U.S. exports by 160 million lbs.
“That’s not good news when we’re already having problems moving product domestically and abroad,” a trader said.
Wednesday afternoon’s mandatory wholesale pork price, calculated on a plant delivered basis, was $82.07/cwt. It was up 65 cents from Tuesday after being down nine cents Wednesday morning, according to USDA.
— Theopolis Waters writes for Reuters from Chicago.
