Chicago Mercantile Exchange (CME) live cattle futures closed lower on Monday as larger-than-expected March feedlot placements in Friday’s U.S. Department of Agriculture monthly cattle-on-feed report prompted selling, said traders and analysts.
The government report showed a surprising rise in the number of cattle placed in feedlots as harsh winter weather in February delayed placements until March.
A USDA cold storage report issued on Monday reported total beef stocks in March at 513.2 million pounds, a record high for the month. That was up five per cent from February and up two per cent versus March 2012.
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The report could create some concern for CME live cattle traders because it reflected a slowing of beef sales in recent months, Allendale Inc. chief strategist Rich Nelson said.
More-timely bearish factors such as weaker cash cattle and wholesale beef prices, along with Friday’s cattle report, will hold traders’ attention rather than Monday’s negative cold storage data, he said.
CME live cattle ended above session lows buoyed by sentiment that futures had already priced in some of Friday’s bearish cattle data. June’s discount to recent cash cattle prices lured would-be buyers.
Spot April live cattle closed down 0.375 cent/lb. to 125.975 cents. It closed slightly above the 10-day moving average support level at 125.92 cents (all figures US$).
Most-actively traded June ended at 120.825 cents, down 0.475 cent, finishing just below the 10-day moving average of 127.87 cents.
Cash-basis cattle last week sold at mostly $126 per hundredweight (cwt), $1 to $2 lower than the previous week, said feedlot sources.
Traders waited for feedyards to count the number of cattle available for sale this week.
“Packers are expected to hold the line against higher cash prices until conducive grilling weather suggests they do otherwise,” a trader said.
USDA on Monday quoted the average wholesale choice beef price at $190.78/cwt, up 68 cents from Friday; Select cuts gained four cents to $183.67.
Lower live cattle futures and technical selling earlier dropped CME feeder cattle to new contract lows.
Spot April settled down 0.4 cent/lb. to 133.625 cents. It posted a fresh contract low of 132.95 cents in after-hours trading.
Most-actively traded May closed at 138.6 cents, 0.6 cent lower and marked a new contract low of 137.65 cents.
Hogs fall amid cash uncertainty
CME hog futures fell on uncertainty regarding cash hog prices in the near term, analysts and traders said.
Government data on Monday showed the average hog price in the Iowa/Minnesota market at $80.26/cwt — up $2.31 from Friday after slipping 25 cents from the day before.
Packers are making money processing hogs but look for wholesale pork prices to stabilize, indicating supermarkets want meat for spring grilling promotions, a trader said.
Monday’s USDA mandatory wholesale pork price, calculated on a plant-delivered basis, was at $85.44/cwt, $1.54 higher than Friday. On April 12 the government replaced its voluntary pork price data with the new mandatory reports.
Investors were unfazed by USDA’s end-of-March pork stocks at 648.8 million pounds. They were up two per cent from the month before and up six per cent year-over-year.
“I consider the data only slightly bearish because there were no surprises based on some of the trade estimates out there,” said Allendale’s Nelson.
CME June hogs settled 0.75 cent lower at 89.45 cents per lb. July finished at 89.625 cents, 0.65 cent lower.
Both contracts fell below their respective 10-day moving averages of 89.69 cents and 89.82 cents.
— Theopolis Waters writes for Reuters from Chicago.
