By Theopolis Waters
CHICAGO, Sept 30 (Reuters) – Chicago live cattle futures on Wednesday drifted to a two-year low, with October down the 4.5-cent daily price limit, as wholesale beef values and preliminary cash prices continued to sag, traders said.
Spot-October settled at 124.675 cents per lb. December ended 3.225 cents lower at 130.925 cents. Live cattle’s trading limit will remain at 4.5 cents on Thursday following the October contract’s limit-down settlement.
Wednesday morning’s wholesale Choice beef price was at $208.49 per lb., down 82 cents from Tuesday. Select cuts fell $2.77 to 204.92, the U.S. Department of Agriculture said.
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Market-ready, or cash, cattle in Kansas moved at $124 per cwt., down from mostly $130 last week, feedlot sources said. There were no reports of sales, bids or asking prices elsewhere in the U.S. Plains.
The glut of heavyweight cattle afforded some packers enough inventory for at least the next two to three weeks, feedlot sources and analysts said.
They said competitively-priced pork and extra tonnage from record-heavy cattle exacerbated the already tepid seasonal demand for beef.
In a trading strategy known as bear spreading, some traders sold October futures and simultaneously bought deferred months to avoid the potential delivery of live cattle against that contract on Monday.
“No one wants to take deliveries in the first place. But, catching some (deliveries) and not being able to get them slaughtered is a double nightmare,” said Cassandra Fish, author of industry blog The Beef.
CME live cattle market losses and sharply lower cash feeder cattle prices pressed the exchange’s feeder cattle contract to a 1 ½ year low.
October ended at 178.175 cents per lb., down 2.650 cents. Feeder cattle’s trading limit will return to their original 4.5-cents limit on Thursday after failing to settle at the expanded 6.75-cent limit on Wednesday.
OCT HOGS UP, OTHERS DOWN
Firm cash and wholesale pork values underpinned CME’s October lean hog contract, traders said.
Burdensome supply worries leaned on deferred trading months, they said.
Spot-October hogs closed up 0.275 cent per lb. at 73.525 cents, December down 0.325 cent to 66.725 cents and February finished 0.775 cent lower at 69.025 cents.
The USDA reported Wednesday morning’s western Midwest average cash hog price at $70.14 per cwt, $1.44 higher than on Tuesday.
The morning’s wholesale pork price was at $85.16 per cwt, up 8 cents from Tuesday, helped by $2.46 higher loin costs according to USDA.
