By Theopolis Waters
CHICAGO (Reuters) — Chicago Mercantile Exchange live cattle futures closed lower on Wednesday on caution before this week’s prices for slaughter-ready, or cash, cattle, traders said.
December closed US1.450 cents per pound lower at 165.200 cents, and February down 1.325 cents at 166.075 cents.
U.S. Plains feedlots priced cash cattle at more than $170 per hundredweight (cwt.) with no response from packers. Last week, cash cattle traded at mostly $168.
Packer margins are poor and they are having difficulty driving up wholesale beef prices at a time when demand for product strengthens heading into the middle of November, said U.S. Commodities analyst Don Roose.
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Wednesday morning’s choice wholesale beef price rose 40 cents per hundredweight (cwt.) from Tuesday to $250.54. Select was up 29 cents to $238.78, the U.S. Department of Agriculture said.
Beef packer margins were a negative $115.35 per head, compared with a negative $112.45 on Tuesday and a negative $100.50 a week earlier, according to Colorado-based analytics firm Hedgersedge.com.
Processors reduced slaughters to stabilize their fallen margins, curb cash spending and boost wholesale beef values.
Fund selling developed after the December and February contracts drifted below their respective 20-day moving averages of 166.42 cents and 166.20 cents.
CME livestock market participants monitored the dollar’s surge following Tuesday’s U.S. elections. The stronger dollar could hurt exports of U.S. goods, including meat.
CME feeder cattle were pressured by fund selling, live cattle market selloff and corn price rebound.
November closed 1.350 cents per lb. lower at 235.775 cents, and January at 230.200 cents, down 1.400 cents.
HOGS FALL ON CASH PRICES
CME lean hogs slumped as cash prices spiraled downward amid abundant heavyweight seasonal supplies, traders said.
December ended down 0.850 cent per lb. at 87.125 cents, and February 1.050 cents lower at 86.750 cents.
Government data quoted Wednesday morning’s average hog price in Iowa/Minnesota down $1.29 per cwt. from Tuesday at 84.42 cents.
From Monday to Wednesday, packers processed an estimated 1.292 million hogs, 12,000 more than a week ago, according to the USDA.
Futures finished off session lows as speculators probed for a market bottom based on profitable packer margins, the morning’s pork cutout price upswing and consumers switching from expensive beef to less-costly pork.
Wednesday morning’s wholesale pork price, or cutout, was up $1.04 per cwt. from Tuesday to $96.71, according to the USDA.
Hedgersedge.com calculated pork packer margins at a positive $14.75 per head, compared with a positive $20.65 on Tuesday and a positive $15.25 a week earlier.
It is difficult to gauge fundamental direction when cash prices and the cutout head in separate directions at the same time, said livestock futures trader Dan Norcini.
