By Theopolis Waters
CHICAGO, May 15 (Reuters) – Chicago Mercantile Exchange live cattle futures ended their three-day rally Friday on profit-taking and the downturn in wholesale beef prices after Thursday’s spike to a record high, traders and analysts said.
June and August closed 1.275 cents per pound lower at 152.525 cents and 150.800 cents, respectively.
Friday morning’s Choice wholesale beef price, or cutout, slumped $2.05 per hundredweight (cwt) from Thursday to $262.69. Select cuts fell 79 cents to $250.52, the U.S. Department of Agriculture said.
Retailers likely bought enough beef for the weekend and will book product hand-to-mouth as the May 25 Memorial Day holiday approaches, traders and analysts said.
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Investors sold futures in anticipation of packers paying the same or less than last week for cash cattle based on Friday’s futures selloff, beef cutout setback and more cattle for sale.
Still, futures finished up from session lows buoyed by their discounts to recent cash prices.
Market-ready, or cash, cattle bids in the U.S. Plains stood at $157 to $160 per cwt. versus up to $164 asking prices, industry sources said. A week ago, cash cattle moved at $161 to $164.
A $160 cash trade is possible this week which would be lower than last week, but still $8 above the June contract, said Lane Broadbent, president of KIS Futures Inc.
June futures led losers after investors sold it and simultaneously bought deferred months in a trading strategy known as bear spreads.
CME feeder cattle posted losses for the first time in seven sessions, pressured by profit-taking and live cattle market selling.
May closed down 0.250 cent per lb to 219.000 cents, and August 0.550 cents lower at 218.400 cents.
HOG FUTURES SAG
CME lean hogs ended lower on profit-taking and spillover live cattle market pressure, traders said.
Fund liquidation developed after June and July drifted below their respective 10-day moving averages of 83.83 cents and 83.96 cents.
June closed 0.600 cent lower at 83.350 cents, and July down 0.725 cent to 83.925 cents.
Some traders worried that packers may soon curb slaughters after higher hog prices and softer wholesale pork values hurt their margins.
The USDA reported Friday morning’s average cash hog price in Iowa-Minnesota jumped $1.58 per cwt from Thursday to $81.83.
Separate government data quoted the morning’s wholesale pork price at $83.56 per cwt, 81 cents lower than Thursday.
