Chicago | Reuters — CME Group live cattle futures eased on Wednesday, pressured as processors pull market-ready cattle forward heading into the late spring, analysts said.
June live cattle futures are discounted versus the cash market, creating an incentive to sell before cash falls.
“We’re going to start narrowing up cash and the June board,” said Scott Varilek, broker at Kooima Kooima Varilek Trading Inc. “Producers are willing sellers, because they see that discount.”
CME June live cattle futures lost 0.5 cent to settle at 134.825 cents/lb. (all figures US$).
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Cash cattle maintained much of its recent strength, with northern trade maintaining at $146/cwt, while southern Plains cattle traded steady at $140/cwt, according to the U.S. Department of Agriculture.
Wholesale demand firmed, with choice cuts of boxed beef adding 19 cents, to $259.74/cwt, while select cuts gained 34 cents, to $247.68/cwt, USDA said.
Feeder cattle were little changed, awaiting direction from corn futures, used as a feedstock. High corn prices have prompted cattle producers to drop weights and move livestock forward more quickly, Varilek said.
“Nobody was figuring on $8 corn when they were buying these feeder calves that are now ready,” he said.
CME August feeder cattle eased 0.075 cent, to 176.2 cents/lb.
Meanwhile, lean hogs gained on technical support after falling to more than three-month lows on Tuesday.
Benchmark June lean hogs added 2.9 cents, to 105.1 cents/lb., bouncing off its 200-day moving average. July hogs firmed 3.2 cents, to 107.05 cents/lb.
Lean hogs have fallen over the last two weeks, pressured by persistent lockdowns across China in an attempt to curb the spread of COVID-19 that suppress demand for pork exports from the U.S.
CME’s lean hog index, a two-day weighted average of cash hog prices, fell 44 cents, to $101.15/cwt.
— Christopher Walljasper reports on agriculture and ag commodities for Reuters from Chicago.
