By Theopolis Waters
CHICAGO, Dec 2 (Reuters) – Chicago Mercantile Exchange live cattle turned lower on Tuesday on profit-taking that wiped out Monday’s gains, traders said.
Prospective futures buyers clung to the sidelines, given the morning’s wholesale beef values pullback and unprofitable packer margins that could weigh on this week’s cash prices.
Last week, market-ready, or cash, cattle in the U.S. Plains sold at mostly $172 to $173 per hundredweight (cwt), feedlot sources said.
Tuesday morning’s Choice wholesale beef price dropped 61 cents per cwt. from Monday to $256.87. Select was 87 cents lower at $244.47, the U.S. Department of Agriculture said.
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The day’s beef packer margins were a negative $104.50 per head, compared with a negative $106.15 on Monday and a negative $109.65 a week earlier, according to Colorado-based analytics firm Hedgersedge.com.
Fund selling developed after December and February drifted below their respective 20-day moving averages of 168.78 cents and 169.85 cents.
December closed 1.325 cents per pound lower at 168.625 cents, and February fell 1.800 cents to 169.050 cents.
CME feeder cattle gained for the third straight session, with support from fund buying and lower corn prices.
January ended 1.475 cents per lb higher at 235.550 cents, and March rose 0.275 cent to 233.475 cents.
MIXED HOGS CLOSE
CME lean hogs closed mixed, weighed on by December futures’ modest premium to the exchange’s hog index for Nov. 28 at 88.45 cents, traders said.
December’s premium and investors’ exiting the contract before it expires on Dec. 12 stirred bear spreads that consisted of traders who sold December and simultaneously bought February.
Speculation that hog prices are about to bottom out seasonally underpinned February, which will assume lead-month duties after December expires.
The onset of cooler weather should slow hog weight gains, making them less available to packers, an analyst said.
Some packers are working through hogs that were booked before the Thanksgiving holiday, while others are topping off inventories for the rest of this week’s production, he said.
The USDA showed the morning’s ave rage cash hog price in the western Midwest region up $61 per cwt. in light volume to $85.62, but down 54 cents to $84.66 in the eastern Midwest.
December closed 0.625 cent per lb. lower at 89.500 cent, while February ended up 0.075 cent at 89.00 cents.
