By Meredith Davis
CHICAGO, Feb 6 (Reuters) – Chicago Mercantile Exchange live cattle futures ended slightly lower on Thursday pressured by expectations of lower cash trade, and weaker wholesale beef prices, traders said.
Beef packers will be reluctant to pay higher prices for cattle in the cash market as wholesale beef prices come off recent highs and their profit margins get squeezed, traders said.
Many investors expect cash prices to be lower than last week’s trade of $145 per hundredweight in Texas and Kansas. There were very light sales earlier this week in the U.S. Plains at $141 to $142.50 per cwt.
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Chicago Mercantile Exchange live and feeder cattle futures rallied to fresh contract highs on Wednesday, as tight supplies and strong cash market prices continued to send future contracts surging, market analysts said.
On Thursday bids stood at $139 to $140 in Kansas, with no bids yet reported in Texas, feedlot sources said.
According to USDA data, the afternoon wholesale choice beef price was at $214.37 per cwt., down $2.27 from Wednesday and $16.38 lower than a week ago. Select cuts were at $214.80 per cwt., down $1.83 and $14.99 less than a week ago, the data showed.
Beef packer margins on Thursday fell deeper into the red to a negative $77.75 per head from a negative $52.90 per head on Wednesday, compared with a positive $15.40 per head a week ago, according to HedgersEdge.com.
Cargill Inc. said its beef processing plant in Schuyler, Nebraska, was closed early on Thursday due to a fire and an ammonia leak. The plant processes about 5,000 head of cattle per day and it was not known when operations would resume, the company said.
The plant’s downtime contributed to a reduced overall slaughter on Thursday. USDA estimated the cattle slaughter at 111,000 head, down from 117,000 a week ago and 120,000 a year ago.
February live cattle ended at 139.550 cents per pound, down 0.150 cents. April ended at 139.075 cents, down 0.025 cents.
CME feeder cattle futures ended firm, supported by soft Chicago Board of Trade corn prices.
March ended at 167.000 cents per lb., up 0.075 cent, and April ended at 167.800 cents per lb, up 0.150 cent.
HOGS END MIXED
CME lean hog futures ended narrowly mixed on Thursday, pressured by profit-taking a day after climbing more than one percent, while firm cash hog prices lent some support, traders said.
Hog futures have rallied in recent days due to an anticipated reduction of hog supplies in the spring and summer months due to the spread of a deadly piglet disease, Porcine Epidemic Diarrhea virus (PEDv), said Craig Turner, commodities broker at Daniels Trading.
“Since there’s no fresh news on that front there seems to be a bit of profit-taking in the back months,” Turner said.
Hog movement resumed but was still slow a day after a winter storm dumped several inches of snow around the U.S. Midwest and Plains regions.
Continued cold temperatures and snow packed roads limited hog trade as cash prices firmed, a CME floor trader said.
The average price of hogs in the Iowa-Minnesota market on Thursday morning rose 14 cents from Wednesday to $$82.69, according to USDA data.
February hogs closed at 86.500 cents per lb., up 0.050 cent. April ended at 94.200 cents per lb., down 0.025 cent.
