Chicago Mercantile Exchange (CME) live cattle futures settled mostly weaker on Tuesday as bullish spreads underpinned April futures while pressuring remaining trading months, traders and analysts said.
They said expectations for fully steady cash cattle prices and modest advances in wholesale beef values lifted spot April CME live cattle.
And bullish spreads pushed spot April beyond the 20-day moving average of 127 cents, touching off buy stops (all figures US$).
Spot April closed 0.45 cent per pound higher at 126.725 cents. Most-actively traded June ended 0.325 cent lower at 121.7 cents. August settled at 122.65 cents, down 0.1 cent.
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U.S. livestock: Cattle futures come down from highs
Cattle futures on the Chicago Mercantile Exchange were weaker on Monday, coming down from recent highs.
Investors are expecting a $128-$129 per hundredweight (cwt) cash cattle trade which would be fully steady with last week. There were no cash bids or asking prices reported by feedlot sources.
Fewer cattle are available for sale ahead of an eventual break from cool, stormy weather in parts of the country that has dampened spring grilling meat demand.
“We’re still talking about snowstorms and blizzards that have delayed any real movement for grilling demand,” West Oak Commodities analyst Tom Tippens said.
“I think we’re going to get it (demand) but it may still be several weeks away,” he said.
But packers are struggling with poor margins which could keep a lid on near-term cash cattle prices.
U.S. beef packer margins on Tuesday were estimated at a negative $51.55 per head versus a negative $45.30 on Monday and a negative $31.05 a week ago, according to HedgersEdge.com
On Tuesday, the U.S. Department of Agriculture reported the average wholesale choice beef price up 14 cents/cwt to $191.09; select cuts gained 37 cents to $186.83.
Higher Chicago Board of Trade (CBOT) corn prices, which may curb feedlot demand for younger cattle, pressured CME feeder cattle futures, traders said.
They also cited steady-to-lower cash feeder cattle prices at the most-watched Oklahoma City market.
April feeder cattle settled down 0.125 cent/lb. to 142.625 cents. May closed unchanged at 144.75 cents. August ended at 151.575 cents, down 0.175 cent.
April hogs up, others down
Traders tracked the CME’s lean hog index, which was at 80.19 cents.
CME spot April hogs ended at 80.725 cents/lb., up 0.2 cent. The contract will expire on April 12.
Most-actively traded June eased from session highs, pressured by its premium to CME index. June hogs fell 0.7 cent/lb. to 89.85 cents. July closed at 90 cents, down 0.25 cent.
“With June CME live cattle, traders are buying its discount to cash while hog traders are selling June’s premium to cash,” said EBOTrading.com senior analyst John Kleist.
Tepid wholesale pork demand amid higher prices and negative packer margins cast doubt over near-term cash hog price direction, traders said.
HedgersEdge.com estimated the U.S. pork packer margins on Tuesday at a negative $2.15 per head versus a negative $5.40 on Monday and a positive $2.50 a week ago.
Tuesday morning’s mandatory wholesale pork price, calculated on a plant delivered basis, was $81.36/cwt, up 74 cents from Monday, according to USDA.
— Theopolis Waters writes for Reuters from Chicago.
