Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Wednesday tumbled to the lowest level for the life of the contract, hit by slumping prices for market-ready (cash) cattle, traders said.
Spot December closed 2.4 cents/lb. lower at 119.85 cents, after marking a fresh contract low of 119.25 cents (all figures US$). February finished 2.925 cents lower at 124.15 cents, and made a new low of 124.075 cents.
So far, cash cattle in the U.S. Plains moved at $118-$121/cwt, down from $124-$126 last week, feedlot sources said.
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Packer inventories are full for the balance of December, especially with plants operating reduced schedules over the Christmas and New Year’s holidays, traders and analysts said.
From Monday to Thursday, 335,000 head of cattle were processed, which was 12,000 more than last week, based on U.S. Department of Agriculture estimates.
“Packers are trying to get as many cattle bought as they can because they’re making money now,” said JRS Consulting owner Jack Salzsieder.
The average beef packer margin for Wednesday was positive $10.70 per head, up from a negative $2.75 on Tuesday, as calculated by HedgersEdge.com.
Already tepid wholesale beef demand faces challenges from increased tonnage as unusually warm weather for this time of year in the Plains causes cattle to gain weight faster.
Wednesday morning’s wholesale choice beef price shed 62 cents/cwt from Tuesday to $203.52. Select cuts were up two cents to $190.75, USDA said.
Live cattle futures’ liquidation sank CME feeder cattle contracts to new lows. January ended 3.225 cents/lb. lower at 150.625, and posted a fresh low of 149.35 cents.
Hogs up on short-covering
CME lean hogs closed higher with strength from short-covering and technical buying, traders said.
December, which will expire on Dec. 14, led the charge as it kept pace with the exchange’s hog index for Dec. 7 at 56.32 cents.
Spot December finished 1.425 cents/lb. higher at 56.75 cents, and February up 0.875 cent, to 59.25 cents.
Market participants cautiously bought futures despite still lower cash values and periodic wholesale pork price weakness amid ample supplies.
USDA data showed a small number of cash hogs in Iowa/Minnesota Wednesday morning, on average, sold at $52.49/cwt, 45 cents/cwt lower than on Tuesday.
Wednesday morning’s wholesale pork price of $71.51/cwt was down 59 cents from Tuesday, USDA said.
— Theopolis Waters reports on livestock markets for Reuters from Chicago.
