Bearish fundamentals halt CME live cattle futures rally

CHICAGO, Aug 31 (Reuters) – Chicago Mercantile Exchange live cattle futures ended lower on Wednesday following softer wholesale beef values and this week’s disappointing cash prices, traders said.

The thinly traded August live cattle contract, which expired at noon CDT (1700 GMT), closed up 0.450 cent per pound at 111.950 cents.

Most actively traded October and December ended 0.900 cent per pound lower at 106.575 and 108.375 cents, respectively.

Futures needed extra impetus to sustain Tuesday’s rally, which lacked fundamental support, a trader said. “There is an abundance of protein, and when cash prices came in lower this week that wasn’t helpful,” a trader said.

So far, packers in the U.S. Plains paid $110 to $111 per cwt for market-ready, or cash, cattle that a week ago had mostly sold for $115, feedlot sources said.

They said packers have bid $110 per cwt for unsold cattle priced over $115.

Wednesday afternoon’s choice beef price slipped 13 cents per cwt from Tuesday to $196.49. Select cuts fell $1.46 to $189.71, according to the U.S. Department of Agriculture.

Processors are buying fewer cattle because they will be closed for the U.S. Labor Day holiday on Monday, analysts and traders said. Retailers have bought almost all the meat they need to feature for the three-day holiday weekend, they added.

Technical selling and live cattle future’s retreat sent CME feeder cattle lower. September ended 2.000 cents per pound lower at 140.525 cents.

CME lean hogs gained for a second straight session on month-end short-covering and futures’ discounts to the exchange’s hog index for Aug. 29 at 66.34 cents, said traders.

They said some investors had bought hog futures and sold live cattle contracts in a trading strategy known as spreading.

October ended 0.800 cent per pound higher at 62.850 cents, and December closed up 0.425 cent to 57.525 cents.

Fund buying emerged after October and December cleared their respective 40-day moving average of 62.19 and 57.23 cents.

Market bears were skeptical that future’s recent run-up would last as abundant supplies continued to pressure cash prices with a seasonal supply increase ahead.

Hogs will gain weight quicker in cooler fall-like conditions while consuming newly harvested corn, CME livestock futures trader Dan Norcini said.

The government reported that Wednesday afternoon’s average cash hog price in Iowa/Minnesota had dropped 54 cents per cwt from Tuesday to $61.05.

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