CHICAGO, Oct 27 (Reuters) – Chicago Mercantile Exchange live cattle futures finished lower on Tuesday, pressured by cash price pessimism that later improved following unexpectedly better cash prices which lifted contracts from morning lows, traders said.
Spot October closed 2.875 cents per lb lower at $136.675 cents, but is currently down 0.675 cents to 138.875 in electronic trading. December ended 1.400 cents per lb lower at 140.600, but is now 0.325 cent higher at 142.325 cents.
“I was surprised to see packers coming out the box paying steady money for cattle as last week, considering their margins are now below break even,” a trader said.
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On Tuesday afternoon, market-ready, or cash, cattle in Texas and Kansas sold at $138 per cwt, which matched prices there last week, feedlot sources said.
Investors await the sale of remaining cattle in the U.S. Plains that are priced at $140 per cwt and higher.
The average beef packer margin for Tuesday was negative $16.35 per head, compared to a positive $4.40 on Monday and a positive $24.45 a week ago, as calculated by HedgersEdge.com.
Their data showed packer margins dipped into red ink for the first time since negative 10 cents per head on Aug. 11.
Periodic wholesale beef price declines and high-priced cattle in recent weeks wore down profits for packers that may respond by curtailing plant operations.
Monday and Tuesday’s combined cattle slaughter totaled 222,000 head, down 3,000 from last week, based on U.S. Department of Agriculture data.
Technical selling and initial back-month live cattle market weakness pulled down CME feeder cattle futures, with October ending 1.075 cent per lb lower at 192.600 cents.
CME lean hogs felt pressure from the day’s softer cash and wholesale pork values, trader said.
December closed 1.600 cents per lb lower at 61.250 cents, and February down 1.100 cents to 64.700.
Cash hog prices in the Iowa/Minnesota hog market on Tuesday morning fell 41 cents per cwt from Monday to $69.57, USDA said.
Separate government data showed the morning’s wholesale pork price declined 29 cents per cwt from Monday to $85.07.
Packers resisted raising bids for hogs that are in good supply and except for last-gasp buying, supermarkets are finished buying product for the rest of October Pork Month, traders and analysts said.
