Chicago | Reuters –– Chicago Mercantile Exchange live cattle futures closed lower on Monday, partly in response to Friday’s bearish U.S. Department of Agriculture monthly Cattle on Feed report, traders said.
Friday’s report showed a bigger-than-anticipated movement of cattle into feedlots last month compared to a year ago.
March’s increased placements of heavier cattle could mean more beef and lower cash prices beginning around late summer, analysts and traders said.
The recent wholesale beef price drop suggests push back from grocers who are mulling abundant lower-cost pork.
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“If wholesale beef starts losing its footing… it has a long way to drop before it uncovers demand,” said Archer Financial Services broker Dennis Smith.
Monday morning’s choice wholesale beef price was at $256.73 per hundredweight (cwt), down 26 cents from Friday (all figures US$). Select cuts slipped 21 cents, to $247.41, USDA said.
Fund selling developed after June drifted below the 20-day moving average of 150.42 cents.
CME live cattle futures’ discounts to last week’s prices for market-ready (cash) cattle attracted downside buyers.
Last week, a modest number of cash cattle in the U.S. Plains sold at $157 to $160.50/cwt, compared to $160 to $163 the week before, said industry sources.
April ended 0.7 cent/lb. lower at 160.475 cents, and June down 0.925 cent, to 150.275 cents.
Lower corn futures and steady to $2/cwt higher cash feeder cattle prices underpinned the April CME feeder cattle contract.
Remaining feeder cattle months felt pressure from technical selling and the softer live cattle market.
April, closed up 0.05 cent/lb. to 214.9 cents, May 2.625 cents lower at 211.4 cents and August ended down 2.5 cents, to 213.175 cents.
Mixed hogs settlement
CME lean hogs finished narrowly mixed, supported by the recent cash and wholesale pork price uptrend, traders said.
But futures’ premiums to CME’s hog index for April 23 at 65.39 cents stirred sporadic selling, they said.
May closed 0.325 cent/lb. higher at 72.275 cents, and June down 0.05 cent, to 79.4 cents.
USDA data showed Monday morning’s average cash hog price in Iowa/Minnesota was $1.16/cwt higher in light volume from Friday to $65.88.
Separate government data reported the Monday morning wholesale pork price was up 36 cents/cwt from Friday to $70.30.
Packers are keeping a close eye on their narrow margins while booking hogs for this week’s production, traders said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.
