Chicago | Reuters — Chicago Mercantile Exchange live cattle futures turned lower on Wednesday on a round of profit-taking after most months climbed to life-of-contract highs, with a seasonal downturn in beef prices adding to bearish sentiment, traders said.
Most-active August live cattle futures settled down 1.95 cents at 176.875 cents/lb., retreating after rising to a contract high of 181.175 cents (all figures US$). October cattle ended down 1.475 cents at 180.25 cents after peaking at 184.35 cents.
August feeder cattle futures settled down 0.575 cent at 246.575 cents/lb., turning lower after rising to a contract high at 251.3 cents.
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In the boxed beef market, the U.S. Department of Agriculture prices choice cuts at $310.98 per hundredweight (cwt), down $1.14 from Tuesday and the lowest since June 2.
Coupled with soaring cash cattle prices, the slide in wholesale beef prices has cut meat packers’ profit margins to around $14.50 per head of cattle, from $134.15 a week ago, according to livestock marketing advisory service HedgersEdge.com.
“The beef market has been under pressure for a couple of weeks. So the packer margins are starting to get squeezed,” said Don Roose, president of Iowa-based U.S. Commodities.
“Seasonally it is not unusual, the summer doldrums,” Roose said, noting beef demand typically remains slow until the Labour Day holiday in early September.
CME hog futures also closed lower, retreating from early strength. August lean hogs settled down 2.225 cents at 95.35 cents/lb., and the October contract ended down 0.8 cent at 82.175 cents.
— Julie Ingwersen is a Reuters commodities correspondent in Chicago.
