By Theopolis Waters
CHICAGO, Feb 9 (Reuters) – Chicago Mercantile Exchange live cattle futures ended lower on Tuesday after traders sold the February contract and bought deferred months while awaiting cash prices later this week, traders said.
On Tuesday, packers in Texas and Kansas bid US$132 per cwt for market-ready, or cash, cattle against sellers who asked $138, said feedlot sources. Last week, cash cattle in the U.S. Plains moved at mostly $136 in light trade.
The cash market is vulnerable after trading $136 last week when people had anticipated $140 to $142 sales, said KIS Futures vice president Lane Broadbent.
Some market participants viewed this week’s early cash bids as a sign that packers might be short on inventory.
But, others said a few processors may avoid spending more for cattle after taking delivery of animals that had been delayed as a result of last week’s blizzard in the central Plains.
Also, a few packers reduced slaughter rates to realign their margins and shore up sagging wholesale beef prices.
The morning’s wholesale choice beef price slipped 5 cents per cwt from Monday to $218.76. Select cuts had fallen $1.51 to $215.07, the U.S. Department of Agriculture said.
Tuesday’s average beef packer margin was a negative $33.95 per head, up from a negative $42.80 for Monday and down from a negative $27.75 a week ago, as calculated by HedgersEdge.com.
February live cattle closed 1.650 cents per lb lower at 131.400 cents, and April ended down 0.250 cent to 131.150 cents.
Soft cash feeder cattle prices weakened the exchange’s March feeder cattle contract, with April supported by its discount to CME’s feeder cattle index for Feb. 8 at 159.76 cents.
March feeders finished down 0.325 cent per lb to 149.000, and April gained 0.125 cent to 149.100 cents.
WEAK HOG FUTURES SETTLEMENT
Cash price uncertainty, and February futures tracking the exchange’s hog index for Feb. 5 at 64.62 cents, pressured CME lean hog contracts, traders said.
Spot February ended down 0.175 cent to 64.850, and April slipped 0.100 cent to 69.625 cents.
On Tuesday morning, cash hog prices in the Midwest held steady as packers filled inventories for this week’s production, said dealers.
The uptick in wholesale pork values, partly due to ham buying for Easter’s early arrival this year, limited futures losses, said traders.
The morning wholesale pork price on Tuesday jumped $1.15 per cwt from Monday to $78.11, USDA said. (Reporting by Theopolis Waters; Editing by James Dalglei
