CHICAGO, Dec 16 (Reuters) – Chicago Mercantile Exchange live cattle futures slumped on Wednesday, weighed down by investor caution while waiting for the remainder of cash cattle to change hands, traders said.
Spot December ended down 0.325 cent per lb to 119.975 cents, and February 0.550 cent lower at 124.925.
So far, a few market-ready, or cash, cattle in Texas sold at $118 per cwt and $117 in Kansas, down $1 to $2 from last week, said feedlots sources.
They said bids for remaining cattle in the southern U.S. Plains held at $117 to $118 against $122 asking prices.
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Plants scheduled to be offline during the Christmas holidays minimize the chance of packers spending more for supplies than last week.
Still, some are banking that bouts of rain and snow in parts of the central Plains will worsen already muddy conditions in feedyards, causing animals to gain weight slower while disrupting the flow of animals to packers.
The morning’s wholesale beef price bounce freed futures from session lows, but traders said more than one day is needed to establish an uptrend.
Wednesday morning’s wholesale choice beef price jumped $1.29 per cwt from Tuesday to $198.50. Select cuts gained 38 cents to $187.19, according to U.S. Department of Agriculture data.
Live cattle futures losses, and this week’s sharply lower cash feeder cattle prices, sank CME feeder cattle to a two-year low. January finished 0.825 cent per lb lower at 147.700.
“The feeder cattle market is collapsing because feedlots have extremely negative margins, with cattle going to market taking huge losses,” said Brock Associates analyst Doug Houghton.
CME lean hogs felt pressure from lower cash and wholesale pork values amid plentiful supplies, traders said.
Spot February closed 1.025 cents per lb lower at 57.900 cents, and April down 0.450 cent to 63.725 cents.
USDA data showed Wednesday morning’s average cash hog price in the western Midwest at $51.23 per cwt, 98 cents lower than on Tuesday.
The morning’s wholesale pork price fell $1.34 per cwt from Tuesday at $73.90, following the $6.14 drop in costs for picnic shoulder cuts, the USDA said.
With plant cutbacks over the upcoming holidays, some packers are believed to have enough inventory through the balance of the year.
“We’re anticipating a big kill this Saturday, close to 300,000 head, because it’s going to be such a shortened week next week,” an Iowa hog dealer said.
